GUIDELINES FOR FOREIGN

EXCHANGE TRANSACTIONS

Volume - 1

SUMMARISING
Instructions as of November 30, 2017 issued to
Authorised Dealers and Money Changers in Foreign Exchange

To be read in conjunction with other instructions, subsequent

amendments and modifications issued from time to time.

BANGLADESH BANK
Foreign Exchange Policy Department

2018
 Preface

This publication, titled 'Guidelines for Foreign Exchange Transactions', is the successor
to the last (2009) edition of the same. This is a compilation of the instructions to be
followed by the Authorised Dealers & their constituents, Money Changers in
transactions relating to foreign exchange. These guidelines come in two volumes. The
first volume includes the instructions and the prescribed forms/declarations relating to
individual transactions. The second volume delineates the procedure of reporting of
foreign exchange transactions by Authorised Dealers to Bangladesh Bank, and includes
the proformas for monthly returns, statements, schedules for such reporting. Both
volumes include instructions as on November 30, 2017 and should be read with FE
Circulars/Circular Letters issued subsequently.

Foreign Exchange Policy Department

Bangladesh Bank
Head Office, Dhaka.
January, 2018.
 Acronyms
ACU Asian Clearing Union
AD Authorised Dealer
AML-CFT Anti-Money Laundering - Combating the Financing of Terrorism.
AMU Asian Monetary Union
BASIS Bangladesh Association of Software and Information Services
BB Bangladesh Bank
BEPZA Bangladesh Export Processing Zones Authority
BEZA Bangladesh Economic Zones Authority
BIDA Bangladesh Investment Development Authority
BJA Bangladesh Jute Association
BJMC Bangladesh Jute Mills Corporation
BMET Bureau of Manpower Employment and Training
BO Beneficiary Owner
BSEC Bangladesh Securities and Exchange Commission
BTB Back To Back
CAAB Civil Aviation Authority of Bangladesh
CCI&E Chief Controller of Imports and Exports
CPT Carriage Paid To
CRF Cost and Freight
DEDO Duty Exemption and Drawback Office
EDF Export Development Fund
EFT Electronic Fund Transfer
EPB Export Promotion Bureau
EPZ Export Processing Zone
ERD Economic Relations Division
ERQ Exporters' Retention Quota
EZ Economic Zone
FC Foreign Currency
FCA Free Carrier Alongside
FCR Forwarder Cargo Receipt
FEID Foreign Exchange Investment Department
FEOD Foreign Exchange Operation Department
FEPD Foreign Exchange Policy Department
FERA The Foreign Exchange Regulation Act, 1947
FER Foreign Exchange Regulation
FOB Free On Board
GBP Great Britain Pound
GFET Guidelines For Foreign Exchange Transactions
HAWB House Airway Bill
IC International Card
ICC International Credit Card
IDRA Insurance Development and Regulatory Authority
ITE Information Technology Enabled
LC Letter of Credit
LCAF Letter of Credit Authorisation Form
NBR National Board of Revenue
NFCD Non-resident Foreign Currency Deposit
NITA Non-resident Investors' Taka Account
NRBs Non-resident Bangladeshis
NRTA Non-resident Taka Account
OPGSP Online Payment Gateway Service Provider
PRC Proceed Realisation Certificate
PTA Prepaid Ticket Advices
RFCD Resident Foreign Currency Deposit
RJSCF Registrar of the Joint Stock Companies and Firms
RIT Rationalised Input Template
SFCAMS Special Foreign Currency Account Monitoring System
SWIFT Society for Worldwide Interbank Financial Telecommunication
TC Travellers' Cheque
TOAB Tour Operators Association of Bangladesh
UGC University Grant Commission
USD United States Dollar or US Dollar
 CONTENTS
CHAPTER PAGES
1 Introductions and Definitions ... ... ... 1
2 Authorised Dealers and Money Changers. ... ... ... 3
Instructions for Money Changers ... ... ... 4
3 Bangladesh Bank's Transactions with ADs ... ... ... 8
4 Foreign Currency Accounts of the ADs and Purchase and Sale of Foreign Currency 11
Forward Dealings in Foreign Exchange ... ... ... 13
Hedging the Price Risk of Commodities ... ... ... 15
Non-Resident Taka Accounts of Foreign Bank Branches and Correspondents ... 16
5 Outward Remittances ... ... ... 17
Inward Remittances ... ... ... 19
Dealings in Foreign Currency Notes and Coins Etc. ... ... ... 21
6 Import and Export of Currency Notes and Coins, Foreign
Exchange, Gold, Silver, Jewellery and Securities Etc ... ... ... 23
7 Imports ... ... ... 28
Letters of Credit and Remittances against Imports ... ... ... 34
Back to Back LCs ... ... ... 44
Deposit of Counterpart Fund in respect of Imports under
Non Project Commodity Loans/Credits/Grants ... ... ... 47
8 Exports ... ... ... 50
Exports from the Export Processing Zones (EPZs) ... ... ... 67
9 Foreign Investment in Bangladesh ... ... ... 69
Operations in Securities ... ... ... 73
10 Commercial Remittances (Other than for Imports) ... ... ... 76
11 Private Remittances ... ... ... 108
12 Travel ... ... ... 121
13 Private Foreign Currency Accounts ... ... ... 137
Non Resident Foreign Currency Deposit Accounts ... ... ... 141
Resident Foreign Currency Deposit Accounts ... ... ... 143
Exporters' Retention Quota Accounts ... ... ... 144
Foreign Currency Accounts for the EPZ Companies ... ... ... 147
Other Foreign Currency Accounts ... ... ... 149
14 Convertible and Non-convertible Taka Accounts ... ... ... 152
Private Non-Resident Taka Accounts ... ... ... 154
Non-Resident Blocked Taka Accounts ... ... ... 160
Non-Resident Investor's Taka Accounts. ... ... ... 162
15 Borrowing Abroad by Residents ... ... ... 164
16 Loans, Overdrafts and Guarantees ... ... ... 167
Credit Facilities to Industries in EPZs ... ... ... 175
17 Foreign Exchange Transactions for Agency Services ... ... ... 178
Transaction with Branch Offices, Liaison Offices, Representative Offices etc. ... 179
Foreign Exchange Transactions of Freight Forwarders ... ... ... 180
18 Insurance Business ... ... ... 181
Reinsurance ... ... ... 184
19 Payment Through International Cards ... ... ... 185
20 Foreign Exchange Transactions by the Enterprises of
Economic Zones in Bangladesh ... ... ... 191
 APPENDICES

APPENDIX 1 Foreign Exchange Regulation Act, 1947 (VII of 1947).

APPENDIX 2 Notifications issued by the Government of the People's Republic

of Bangladesh and the erstwhile Government of Pakistan under
Foreign Exchange Regulation Act, 1947 (VII of 1947).

APPENDIX 3 Notifications issued by the Bangladesh Bank and the erstwhile

State Bank of Pakistan under Foreign Exchange Regulation Act,
1947 (VII of 1947) & Bangladesh Bank Order, 1972 (President's
Order No. 127 of 1972).

APPENDIX 4 List of Bangladesh Bank's offices and their jurisdictions.

APPENDIX 5 (1-103) Specimen forms of applications, declaration, etc. other than

periodic returns & schedules.

APPENDIX 6 (1-3) 1. Notification issued by the Board of Investment (presently

Bangladesh Investment Development Authority) for obtaining
loan from abroad by industrial enterprises in Bangladesh in the
private sector;

2. Policy guidelines for establishment of drawing arrangement

between the exchange houses abroad and the banks operating
in Bangladesh;

3. Procedure for repatriation of sale proceeds of non-resident

owned equity in unlisted companies purchased by residents in
Bangladesh.
 CH 1 1

CHAPTER 1
INTRODUCTION AND DEFINITIONS
1. Foreign Exchange Regulation (FER) Act, 1947 (Act No. VII of 1947, amended upto September
09, 2015) enacted on March 11, 1947 in the then British India provides the legal basis for
regulating certain payments, dealings in foreign exchange and securities and the import and export
of currency and bullion. This Act was first adapted in Pakistan and then in Bangladesh. The Act is
reproduced at Appendix 1. Bangladesh Bank is responsible for administration of regulations under
the Act. Appendix 4 provides a list of Bangladesh Bank's offices and their jurisdictions.

2. Basic regulations under the FER Act, 1947 are issued by the Government as well as by
Bangladesh Bank in the form of Notifications which are published in the Bangladesh Gazette.
Notifications issued by the Bangladesh Government and the erstwhile Government of Pakistan
and Bangladesh Bank and the erstwhile State Bank of Pakistan are reproduced at Appendices 2
and 3. Directions having general application are issued by Bangladesh Bank in the form of
notifications, FE(Foreign Exchange) circulars, SPA circulars and circular letters.

3. Authorised Dealers (ADs) in foreign exchange are required to bring the foreign exchange
regulations to the notice of their customers in their day-to-day dealings and to ensure compliance
with the regulations by such customers. The ADs should report to Bangladesh Bank any attempt,
direct or indirect, of evasion of the provisions of the Act, or any rules, orders or directions issued
thereunder.

4. (i) The ADs must maintain adequate and proper records of all foreign exchange transactions
and furnish such particulars in the prescribed returns for submission to Bangladesh Bank. They
should continue to preserve the records for a reasonable period unless otherwise instructed by
Bangladesh Bank for ready reference as also for inspection, if necessary, by Bangladesh Bank's
officials. To mention, ADs shall preserve the printed copy of Form TM (Appendix 5/9), Form-
C (Appendix 5/10), Form C-ICT (Appendix 5/11), Form IMP (Appendix 5/16) and EXP Form
(Appendix 5/31) along with supporting papers at their own custody for at least 05 (five) years
for record and inspection of Bangladesh Bank. However, in respect of cases which are under
investigation by Bangladesh Bank inspection team/other Government agencies, the relevant
Forms (TM, C, IMP & EXP as the case may be) and full set of related documents shall be
disposed of only after obtaining clearance from the inspection team/Government agency
concerned.

(ii) Online Reporting

Bangladesh Bank has developed online reporting system for all types of inland and cross border
foreign exchange transactions. ADs are, therefore, advised to report all types of their foreign
exchange transactions carried out by them, including those of OBUs to the different web portals
 CH 1 2

of Bangladesh Bank on regular basis as directed by the concerned departments. To report

different information to the online systems, ADs are advised to follow the instructions given in
the different FE circulars, FE circular letters and user guidelines available in the website of
Bangladesh Bank.

5. This publication summarises the instructions issued under the FER Act, 1947 as well as the
prudential instructions issued by Bangladesh Bank (as of November 30, 2017) to be followed by
ADs and Money Changers in their day-to-day foreign exchange transactions.

6. Specimen forms (other than those of periodical returns dealt with in Volume-2) prescribed in
this publication are given in Appendix 5, while Appendix 6 contains (i) Notification issued by
the Board of Investment (Now Bangladesh Investment Development Authority-BIDA) for
obtaining loan from abroad by industrial enterprises in Bangladesh in the private sector (ii)
Policy guidelines for establishment of drawing arrangement between the exchange houses abroad
and banks operating in Bangladesh (iii) Procedure for repatriation of sale proceeds of
non-resident owned equity in unlisted companies purchased by residents.

7. Terms having a special meaning for the purpose of the FER Act, 1947 are defined under
Section 2 of the Act. However, for the purpose of this publication and the instructions issued by
the Bangladesh Bank from time to time, the following terms as defined below shall be used in
addition to those defined under Section 2 of the FER Act, 1947.

(i) Taka
Taka means the Bangladesh currency unless otherwise specified.

(ii) Dollar
Unless otherwise indicated the term dollar used in this publication shall mean the US dollar
(USD).

(iii) Money Changers

Wherever used in this publication, the term "Money Changer" would mean a sole proprietorship
or partnership firm/company licenced by Bangladesh Bank under FER Act, 1947 to act as Money
Changer for dealing in certain foreign exchange transactions as directed by Bangladesh Bank
from time to time.