Regulatory Alerts2026-03-15
Access to Finance from Domestic Sources Against Overseas Bank Guarantees and Standby Letters of Credit
Bangladesh Bank has authorized licensed banks and finance companies to extend Taka loans to resident companies using overseas Bank Guarantees or Standby Letters of Credit as collateral, overriding previous restrictions on foreign-located security. Lenders must ensure the guarantees are unconditional, irrevocable, and issued by institutions meeting a minimum BB Grade 1–2 equivalent credit rating, while prohibiting any fees or charges payable by the borrower. Financial institutions are required to legally vet the governing law and enforceability of each guarantee, immediately report any invocation or liquidation to the central bank, and maintain comprehensive records for regulatory inspection.
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