Extension of Credit Facilities to Industries In EPZS

(Bangladesh Bank FE Circular No. 9, dated 23 January 1984)
1. It has since been decided that Type-A industries of the Bangladesh Export
Processing Zones would be allowed to obtain short-term repatriable foreign
currency loans from overseas banks and financial institutions against mortgage
/ hypothecation of fixed and other assets subject to prior clearance from the
Bangladesh Bank.
(i)  The Type-A industry of the EPZs will submit their application through any
authorized dealer detailing the terms and conditions of the repatriable foreign
currency loans for prior approval of the Bangladesh Bank.
(ii)   The assets against which charge will be created have to be fully owned by
the Type-A industry in Bangladesh.
(iii)    After obtaining prior approval from the Bangladesh Bank, the authorized
dealer may credit the amount of the short-term foreign currency loans in the FC
accounts of Type-A industries maintained by them in terms of para 4 of FE
Circular No. 37 of 1983. The above FC account may also be freely debited for-
(a) Making remittances abroad for the importation of capital machinery and raw
materials, payment of interest, service charges and repayment of loan etc.
and
(b) For crediting Taka account maintained by the Type-A industries for
meeting their local expenses.
(iv) The above loans will not get any forward cover facility against fluctuation
in exchange rates of Taka.
(v)    In case, the short term repatriable foreign currency loan is called up by the

creditor, the fixed and other assets fully owned by the Type-A industry and
charged to the foreign financing bank will be allowed to be sold and proceeds
thereof repatriated subject to the conditions that-
(a)  The assets are sold in foreign exchange
(b) All liabilities in Bangladesh are paid off and
(c)  Prior approval of the Bangladesh Bank is obtained. No remittance from the
country's foreign Exchange or under Wage Earner's Scheme will be allowed for
this purpose.
(vi) 1. Type-B industries of the Export Processing Zones would also be allowed
to obtain short term repatriable foreign currency loans from overseas banks and
financial institutions subject to prior clearance from the Bangladesh Bank. All
procedures as applicable in this regard in case of Type-A industries have also to
be observed for Type-B industries. But the Type-B industries will not be
permitted to mortgage / hypothecate their fixed assets or raw materials to
anyone outside Bangladesh. The authorized dealers may, however, issue
guarantee to overseas banks and financial institutions for the short term
repatriable foreign currency loans brought in to Bangladesh by the Type-B
industries subject to prior approval of the Bangladesh Bank.
2.    The authorized dealers may also grant Taka loans to Type-B industries up
to 100% of any short-term foreign currency loan brought into Bangladesh
subject to prior clearance of the Bangladesh Bank. Taka loans on matching
basis can be allowed only if the foreign currency proceeds of the loan are
converted into Taka and not credited to any FC account. The Type-B industries
of the EPZs will submit their applications for this purpose through any
authorized dealer detailing the terms and conditions in this regard for prior
clearance from the Bangladesh Bank.
(i)  Type-B industries will not be permitted to mortgage / hypothecate
their fixed assets / raw materials to anyone outside Bangladesh for Taka
loans also.
(ii) Type-B industries will not be allowed to take forward cover facility
for the Taka loans for a maximum period of six months against
fluctuation in exchange rate of Taka as admissible under FE Circular No.
26 of 1983.
(iii)   The above Taka loans against repatriable short term foreign
currency loans will not be allowed to type-A industries.
3.  The authorized dealers may extend credit facilities to Type-C industries as
admissible to such industries outside EPZs.
4.  Bringing in and repatriation of all foreign currency loans including payment
of interest will require the prior approval of the Bangladesh Bank. No prior
approval would, however, be necessary for such repatriation if the remittances

are made out of the foreign currency accounts maintained by Type-A and Type-
B industries of the EPZs where such / foreign currency accounts are maintained
in terms of para 4 of FE Circular No. 37 of 1983. Repayment of principal or
payment of interest will be allowed out of the industries own resources only.
No resources borrowed or acquired in Bangladesh would be allowed to be
utilized for this purpose.
5.    To meet the credit needs of the garments industries of the Bangladesh
Export Processing Zones, it has been decided to extend the back-to-back L / C
facility to the garments industries of the EPZs also. All instructions as
contained in circular letter No. ECP Com. 241/ A-3050, dated 5.12.1982 will
apply in case of garments industries of the EPZs also. In addition, the
authorized dealers should satisfy themselves that necessary arrangements have
been made by the opener so that in case of any shortfall or delay, necessary
foreign exchange would be made available
(i)    The Type-A industry of the EPZs will submit their application
through any authorized dealer detailing the terms and conditions of the
repatriable foreign currency loans for prior approval of the Bangladesh
Bank.
(ii)    The assets against which charge will be created have to be fully
owned by the Type-A industry in Bangladesh.
(iii)    After obtaining prior approval from the Bangladesh Bank, the
authorized dealer may credit the amount of the short-term foreign
currency loans in the FC accounts of Type-A industries maintained by
them in terms of para 4 of FE Circular No. 37 of 1983. The above FC
account may also be freely debited for-
A) Making remittances abroad for importation of capital machinery
and raw materials, payment of interest, service charges and
repayment of loan etc. and
B) For crediting Taka account maintained by the Type-A industries for
meeting their local expenses.
(iv) The above loans will not get any forward cover facility against
fluctuation in exchange rates of Taka.
(v)    In case, the short term repatriable foreign currency loan is called up
by the creditor, the fixed and other assets fully owned by the Type-A
industry and charged to the foreign financing bank will be allowed to be
sold and proceeds thereof repatriated subject to the conditions that-
(a) The assets are sold in foreign exchange
(b) All liabilities in Bangladesh are paid off and

(c) Prior approval of the Bangladesh Bank is obtained. No
remittance from the country's foreign exchange or under Wage
Earner's Scheme will be allowed for this purpose.
(vi)   Type-B industries of the Export Processing Zones would also be
allowed to obtain short term repatriable foreign currency loans from
overseas banks and financial institutions subject to prior clearance from
the Bangladesh Bank. All procedures as applicable in this regard in case
of Type-A industries have also to be observed for Type-B industries. But
the Type-B industries will not be permitted to mortgage / hypothecate
their fixed assets or raw materials to anyone outside Bangladesh. The
authorized dealers may, however, issue guarantee to overseas banks and
financial institutions for the short term repatriable foreign currency loans
brought in to Bangladesh by the Type-B industries subject to prior
approval of the Bangladesh Bank.