Bangladeshi banks are no longer required to seek approval from the Bangladesh Bank to issue payment commitments against the surplus earnings of foreign airlines and shipping companies operating within the country.
Previously, such commitments—essentially pledges by banks to disburse funds at a later date—necessitated prior authorization from the central bank.
With this new directive, banks can now issue payment commitments to repatriate surplus earnings held in the accounts of local agents representing foreign airlines and shipping firms. However, banks must still adhere to certain conditions the Bangladesh Bank sets to ensure responsible lending practices.
According to the notice released by the Bangladesh Bank, banks must comply with applicable credit norms and prudential guidelines, including adherence to the single borrower exposure limit.
Additionally, any application for payment commitments must be supported by documentary evidence demonstrating that appropriate arrangements are in place to cover the due amounts with collateral acceptable to the bank.
Moreover, the issuance of payment commitments must be approved by the board of directors of local banks, and similar approval is required from the management of foreign banks operating in Bangladesh.
This regulatory shift is expected to streamline the process for banks while ensuring that robust risk management practices remain in place. It could potentially enhance the operational efficiency of foreign airlines and shipping companies in repatriating their surplus earnings.
