Bangladesh Bank has introduced a significant regulatory change allowing Bangladeshi airlines and shipping companies engaged in international operations to place surplus foreign currency balances into interest or profit-bearing renewable term deposits. The decision marks an expansion of earlier foreign currency account regulations and aims to improve the efficiency of capital management within industries that routinely handle large amounts of overseas currency.
Previously, these sectors were permitted to maintain foreign currency accounts primarily for operational expenses such as international transactions, fuel costs, freight settlements and overseas obligations. However, the earlier framework did not allow businesses to generate returns on excess balances, leaving considerable foreign currency resources dormant within the banking system. The latest policy seeks to unlock value from these funds while strengthening liquidity management and improving resource allocation.
Key Overview
Bangladesh Bank has expanded its foreign currency framework, allowing internationally operating airlines and shipping companies to earn returns on surplus foreign currency balances through renewable term deposits.
Bangladesh Expands Foreign Currency Deposit Rules for Airlines and Shipping Firms
Bangladesh Bank has introduced a new policy allowing Bangladeshi airlines and shipping companies involved in international operations to earn interest or profits on their surplus foreign currency balances, creating a notable shift in the country’s foreign exchange management framework.
The central bank announced that eligible businesses will now be permitted to place excess foreign currency funds into renewable foreign currency term deposits with their respective Authorized Dealer banks. The move represents a major expansion of regulations previously introduced under SPA Circular No. 2 issued on April 10, 2023, and is expected to improve financial flexibility for companies operating within sectors that frequently manage significant foreign currency inflows and payments.
The development reflects a broader effort by Bangladesh Bank to enhance efficiency within the financial system while ensuring that idle foreign currency resources can contribute more productively to economic activity.
For airlines and shipping companies that regularly generate revenues in foreign currencies and maintain large balances for international operations, the policy creates an opportunity to transform inactive cash holdings into income-generating assets.
Previous Rules Left Foreign Currency Resources Idle
Before the latest directive, Bangladeshi airlines and shipping operators engaged in international activities were allowed to maintain active foreign currency accounts primarily for operational purposes.
These accounts enabled companies to conduct overseas transactions and settle international obligations more efficiently.
Businesses used the accounts for expenses related to international trade, fuel purchases, aircraft and vessel operations, maintenance costs, freight settlements and other foreign transactions linked to global operations.
However, despite allowing businesses to retain foreign currency balances, the previous regulations did not include provisions permitting those balances to generate investment returns.
As a result, companies often maintained substantial foreign currency holdings that remained inactive despite representing potentially valuable financial resources.
The absence of return-generating mechanisms meant that excess funds accumulated within accounts without contributing directly to profitability or treasury optimization strategies.
Bangladesh Bank’s latest amendment seeks to address this issue by introducing opportunities for businesses to earn returns while maintaining access to operational funds.
New Rules Create Return Opportunities
Under the revised framework, internationally operating Bangladeshi airlines and shipping firms can now transfer excess balances into renewable foreign currency term deposits maintained at Authorized Dealer banks.
These deposits will earn either interest or profit depending on the banking arrangement and the type of foreign currency involved.
According to the circular, return rates will be determined based on the existing relationship between banks and customers as well as the particular foreign currency used.
Rather than imposing fixed rates, Bangladesh Bank has chosen a flexible structure that allows individual banks to negotiate terms directly with customers.
This approach gives institutions greater room to develop products suited to the needs of different corporate clients.
The central bank emphasized that only the investment and return provisions have changed.
All other operational instructions and procedures introduced under the earlier 2023 framework remain unchanged.
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Strengthening Treasury Management
The latest development could significantly influence how airlines and shipping companies manage their treasury functions.
Companies operating within these sectors frequently handle substantial cross-border transactions involving multiple currencies.
Airlines receive payments from ticket sales, cargo operations and international partnerships, while shipping companies generate foreign currency revenues through freight services, international logistics and maritime trade activities.
These businesses often maintain considerable balances in foreign currencies to ensure smooth operations and provide buffers against fluctuations in payment schedules.
Under previous arrangements, companies could retain these balances but were unable to maximize the value generated from them.
By allowing funds to be invested in renewable term deposits, firms may now improve liquidity management while creating additional income streams.
For corporate treasury departments, even modest returns on large balances can meaningfully strengthen overall financial performance.
Improved returns may also help offset operational costs in industries where margins can sometimes remain under pressure due to fuel prices, maintenance expenses and global economic fluctuations.
Broader Benefits for the Banking Sector
The impact of the new policy may extend beyond airlines and shipping companies.
The banking sector itself could also benefit from the revised regulations.
Idle foreign currency balances often represent underutilized resources within financial institutions.
Encouraging movement into renewable term deposit structures could strengthen deposit bases while improving liquidity management across banks.
Additional foreign currency deposits may also enhance banks’ capacity to manage foreign exchange resources more efficiently.
The development could potentially create stronger alignment between available foreign currency resources and broader financing requirements within the financial system.
For banks, greater foreign currency deposit activity may support funding strategies and improve asset-liability management.
The policy therefore introduces benefits that extend beyond individual businesses and into the wider financial ecosystem.
Improving Capital Efficiency
The decision by Bangladesh Bank also reflects a growing emphasis among regulators globally on improving capital efficiency.
Financial systems increasingly seek ways to ensure that available resources contribute productively to economic activity rather than remaining inactive.
Idle balances represent missed opportunities for both institutions and broader markets.
Allowing businesses to generate returns from excess resources can strengthen financial resilience and support investment activity.
The latest policy demonstrates a practical approach toward improving resource utilization without introducing major structural changes.
Instead of replacing existing regulations entirely, Bangladesh Bank has expanded the framework in a targeted manner designed to address a specific operational gap.
This approach may reduce implementation challenges while preserving consistency for affected industries.
Supporting Key Economic Sectors
The aviation and shipping industries occupy important positions within Bangladesh’s economy.
Both sectors facilitate trade, connectivity and broader economic activity.
Shipping remains critical for international commerce and exports, while airlines support passenger movement, tourism and cargo transportation.
Because of their international nature, these industries routinely interact with global financial systems and foreign exchange markets.
Providing additional flexibility within foreign currency management may therefore strengthen operational efficiency across sectors with substantial economic importance.
Companies capable of generating returns on surplus funds may gain stronger financial positions and greater ability to invest in growth initiatives.
Regulatory Evolution Continues
The policy also illustrates Bangladesh Bank’s broader approach toward gradual regulatory evolution.
Rather than implementing sweeping reforms, the central bank has increasingly focused on refining and expanding existing frameworks.
The latest amendment builds directly upon SPA Circular No. 2 issued in April 2023.
That continuity may help businesses adapt more smoothly while reducing uncertainty.
Regulators globally often face the challenge of balancing flexibility with stability.
Sudden policy changes can create disruptions or operational difficulties for institutions.
Incremental adjustments, by contrast, frequently provide opportunities to address practical challenges while maintaining broader system consistency.
Looking Ahead
The latest policy introduced by Bangladesh Bank could represent an important step toward more efficient foreign currency management across Bangladesh’s corporate landscape.
For airlines and shipping companies, the ability to generate returns on foreign currency balances may strengthen liquidity management, improve treasury efficiency and create additional financial flexibility.
For banks, increased foreign currency deposit activity could enhance liquidity and support broader financial intermediation.
More broadly, the decision demonstrates how targeted regulatory adjustments can unlock value from existing resources without requiring major structural reforms.
As international trade and cross-border business activities continue evolving, foreign currency management is likely to remain an increasingly important area for policymakers and financial institutions alike.
Bangladesh Bank’s latest move suggests that regulators are increasingly focused on ensuring that capital resources work more efficiently, generating value for businesses while strengthening the overall financial system.
Sources: BSS News, The Business Standard, funds for NGOs
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