The regulator brings operations of banks' offshore banking units (OBU) under its close watch following a steep rise in demand for foreign-currency loans, particularly in private sector.
As part of the regulatory move, sources say, the Bangladesh Bank (BB) has included the OBU operations in a new head of daily foreign-currency-monitoring report.
The daily-reporting obligation is scheduled to take effect finally from March 21.
A reporting format has already been released in this connection to collect information on assets and liabilities of OBU operations along with other relevant data relating to overall foreign-exchange exposure from scheduled banks, officials say.
Scheduled banks have already been asked to provide daily exchange position including OBU operations using new rationalized input template (RIT) on trial basis from February 16, they add.
The BB officials, however, say the daily monitoring report will help them know about real situation on the country's foreign-exchange (forex) market.
Besides, the central bank wants to know about compliance with rules and regulations of OBU operations by the operators through using the daily monitoring report.
"Actually, we want to know about latest limit of OBU fund mobilization from domestic sources as well as the size of assets and liabilities of offshore banking," a BB senior official told the FE.
Earlier on January 31 last calendar year, the central bank had asked the banks to bring down the limit of OBU fund mobilization from domestic sources to 30 per cent of their total regulatory capital by December 31, 2021.
Besides, at the close of business on any day, value of offshore-banking assets in Bangladesh shall not be less than 75 per cent of the liabilities of offshore banking, according to notification issued by the central bank on February 25, 2019.
The central bank had brought the offshore-banking operations in Bangladesh under regulation by issuing the policy in 2019.
In the past, the central bank was not empowered fully to monitor and supervise the OBU operations closely due to legal constraints.
"We've included the OBU operations in our new reporting format to monitor the inflow and outflow of foreign currency through offshore banking properly," another central banker told the FE while explaining main objective of the latest BB moves towards regulating the forex market that remains heated of late with exchange rate of the US dollar with the local currency rising.
Meanwhile, demand for foreign-currency loans through OBUs of banks has increased gradually despite the capping of lending rate at maximum 9.0 per cent by the central bank.
"Short-term foreign-currency credits are still cheaper than local- currency loans mainly due to lower interest rate on such loans," a senior executive of a leading private commercial bank (PCB) told the FE Thursday while explaining the uptrend in such loans.
Under the BB's latest policy, the banks are now allowed to fix the interest rates on buyers/suppliers' credit at six-month LIBOR (London Inter-bank Offered Rate) plus maximum 3.50 per cent.
Effective interest rate on foreign-currency credit is now around 4.0 per cent, according to the private banker.
The businessmen are now allowed to avail such credits to import capital machinery and industrial raw materials.
Meanwhile, outstanding amount of OBU loans that were provided in terms of foreign currency rose to Tk 801.80 billion as on September 30 last calendar year from Tk 630 billion as on December 31, 2020, according to the central bank's latest statistics.
The outstanding amount of OBU loans were Tk 730 billion as on June 30, 2021.
Senior bankers, however, say such foreign-currency loans have increased significantly in recent months following higher import- payment obligations on the economy.
Bangladesh's import expenses jumped more than 54 per cent to $38.97 billion in July-December period of the current fiscal year (FY), 2021-22, from $25.23 billion in the same period a year before.
Higher prices of essential commodities, including petroleum products, on the global market have also pushed up the country's import payments during the period under review, they explain.
Actually, Bangladesh's foreign trade covering import and export has increased significantly during the period under review on the back of gradually reopening economic activities, both domestic and global, after more than one year of slump mainly due to the Covid-19 pandemic.
siddique.islam@gmail.com