Regulatory Alerts2021-06-21
Added
FEPD Circular No. 23: Issuance of repayment commitments as collaterals against external borrowing by resident entities
Authorized Dealers must apply to Bangladesh Bank for specific permission to issue repayment commitments, such as bank guarantees or standby letters of credit, against external borrowing by resident entities. Applications require documentary evidence of collateral coverage, with at least five percent of the commitment amount held as cash margin or unencumbered bank deposits, alongside proper credit assessments and conditional Board of Directors approval. Resident borrowers are exempt from this permission requirement for guarantees that do not involve Authorized Dealer commitments, such as corporate or personal guarantees. Authorized Dealers must ensure all applicable credit norms and prudential parameters are observed before issuing these commitments.