Shawdesh desk:

The Bangladesh Bank on Wednesday allowed banks to provide loans of up to Tk 10 lakh to non-resident Bangladeshis working abroad for emergency purposes.

The BB issued a circular in this regard on the day.

The central bank made the decision to support NRBs who might face unexpected financial crises while they are unable to send remittances home.

According to the circular, banks can extend these loans based on banker-customer relationships for bona fide purposes.

It also said that banks must extend the emergency loans to those NRBs who regularly send remittance through formal channels.

The repayment of these loans must be made from the remittances sent by the borrowers, ensuring that the loans are closely tied to incoming foreign exchange, according to the circular.

Banks are also required to adhere to all applicable credit norms, prudential regulations and due diligence procedures when approving such loans, the BB circular said.

BB officials said that the move was expected to encourage NRBs to continue using formal remittance channels, which was crucial to maintaining steady foreign currency inflows.

If NRBs require loans exceeding Tk 10 lakh, banks will need to obtain prior approval from the central bank before extending additional credit, they said.

In recent years, the country has seen fluctuations in remittance inflows, and measures like this aim to secure a more stable stream by encouraging NRBs to remain within formal banking systems.

Remittance inflow to Bangladesh soared by more than 80 per cent in September compared with that in the same month of the previous year, as expatriates sent more money through formal channels following major political shift in the country.

According to Bangladesh Bank data, the remittance inflow rose to $2.40 billion in September compared with that of $1.33 billion in the same month in 2023.

The inflow was $2.22 billion in August 2024.

The government and the central bank have taken various measures to increase remittance inflow through formal channels, BB officials said.

The country’s foreign currency reserves, according to the International Monetary Fund guidelines, dropped to $19.56 billion on September 25.

The interbank dollar rate increased to Tk 120 each.