Foreign Exchange Regulations in Bangladesh: FERA 1947 and Bangladesh Bank Rules (2026)

Foreign exchange regulations Bangladesh applies in 2026: the framework

Foreign exchange regulations Bangladesh businesses and individuals must follow rest on a statute older than the country itself. The Foreign Exchange Regulation Act 1947 still sets the basic rule that every cross-border payment, receipt and currency holding is restricted unless the law or Bangladesh Bank permits it.[1] What has changed is the machinery on top of it. Since 2025 Bangladesh Bank has rebuilt the operating rulebook as consolidated circulars, each valid for one year, while the taka has moved from a crawling peg towards a market-based rate.

This guide explains how the regime works in October 2026: the Act and the guidelines, the current and capital account distinction, import and export payments, remittances, foreign currency accounts, foreign investment and borrowing, investment abroad, the exchange rate and the penalties. It is written for exporters, importers, foreign-owned companies, banks and private clients who need to know what is permitted automatically, what needs approval, and where the traps sit.

Summary: Bangladesh controls foreign exchange through the Foreign Exchange Regulation Act 1947 and the circulars Bangladesh Bank issues under section 20(3) of that Act. The taka is convertible for current account payments, which authorised dealer banks can approve within published limits, but capital account transactions remain controlled. In 2025 and 2026 the operating rules were consolidated into annual circulars on exports, imports, borrowing and outward remittances.

Key point: The rulebook now lives in consolidated circulars that expire after one year. FEPD-1 Circular No. 26 (exports, 30 July 2026), No. 30 (imports, 13 August 2026), No. 32 (loans and guarantees, 2 September 2026) and No. 40 (outward current account remittances, 30 September 2026) repeal earlier instructions except the reporting rules in the Guidelines for Foreign Exchange Transactions, Volume 2.

At a glance

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Table of Contents

Foreign exchange regulations Bangladesh Bank administers: how the regime is structured

The regime has three layers. At the top sits the Foreign Exchange Regulation Act 1947 (Act No. VII of 1947), which creates the restrictions and the offences.[1] In the middle are government notifications under the Act, some dating from 1948 and 1958, which still fix core duties such as declaring exports and surrendering foreign exchange. At the operational level are Bangladesh Bank's instructions to authorised dealers, historically compiled in the Guidelines for Foreign Exchange Transactions (GFET) and now issued as consolidated circulars.

The statute rarely answers a specific question on its own. Whether an exporter can keep dollars, whether a subsidiary can pay its parent for services, or how much a student may remit is answered by the circulars, and those change several times a year. Any view on the foreign exchange regulations Bangladesh Bank has issued must be checked against the current circular.

Who administers the regime

Within Bangladesh Bank, the Foreign Exchange Policy Department, now split into FEPD-1 and FEPD-2, issues policy circulars on trade, remittances, accounts and licensing; the Foreign Exchange Investment Department (FEID) handles foreign direct investment, share transfers and investment abroad; and the Foreign Exchange Operation Department deals with individual approvals.[3] [14] Authorised dealer banks are the front line: almost every transaction is applied for, approved or refused, and reported there.

The Foreign Exchange Regulation Act 1947: the provisions that matter

The Act is short, and each key section is a prohibition subject to permission. The circulars are the permission.

Authorised dealers and restrictions on dealing

Section 3 allows Bangladesh Bank to authorise dealers in foreign exchange, with limits by currency, transaction type, period or amount, and to revoke that authority. Section 4 bars anyone else from buying, selling or exchanging foreign exchange without permission, requires dealing at authorised rates, and requires foreign exchange acquired for a stated purpose to be used only for that purpose.[1] Money changers and gold dealers hold separate licences, consolidated in FEPD-2 Circular No. 07 of 17 October 2026.[14]

Payments to non-residents

Section 5 prohibits a person in or resident in Bangladesh from paying, or creating a right to payment in favour of, a non-resident unless the payment is permitted.[1] This is what turns intercompany charges, royalties and offshore consultants' invoices into regulatory questions. A contract obliging a Bangladeshi company to pay abroad does not by itself authorise the payment.

Currency, export proceeds, securities and directions

Section 8 controls bringing currency and precious metals into Bangladesh and taking taka or foreign exchange out. Section 12 lets the government prohibit exports unless the exporter declares that the full export value will be received in the prescribed manner and period. Sections 13 and 14 control transfers and issues of securities to non-residents, and section 18B requires non-resident businesses to report new branch or liaison offices to Bangladesh Bank within thirty days of investment approval. Section 20(3) empowers Bangladesh Bank to give directions to authorised dealers, and every consolidated circular cites it as its legal basis.[1] [3]

Guidelines for Foreign Exchange Transactions and the consolidated circulars

The latest edition of the Guidelines for Foreign Exchange Transactions is GFET 2018, published in January 2018 as the successor to the 2009 edition and summarising instructions as of 30 November 2017. Volume 1 contains the transaction rules and forms; Volume 2 the reporting procedures for authorised dealers.[2] No newer edition has been published. Instead, Bangladesh Bank has been replacing Volume 1 subject by subject.

The 2025 and 2026 consolidation cycle

In 2025 Bangladesh Bank issued one-year comprehensive circulars on export trade (FE Circular No. 31), import trade (No. 33), loans and external borrowing (No. 34) and outward current account remittances (No. 37). In 2026 FEPD-1 reissued each in updated form: Circular No. 26 on exports on 30 July, No. 30 on imports on 13 August, No. 32 on loans and guarantees on 2 September, and No. 40 on outward remittances on 30 September.[3] [4] [5] [6]

How to read them

Each 2026 consolidated circular repeals all previous instructions on its subject except the GFET Volume 2 reporting rules, stays valid for one year, and must be read with circulars issued during that year. Where a newly incorporated provision is ambiguous, the original circular should be consulted.[3] [4] Compliance teams should track anniversary dates, keep the original circulars on file, and treat any mid-year circular as an amendment.

Current account and capital account transactions

The most useful distinction in the regime is between current and capital account transactions. The Act defines a capital account transaction as one that creates, modifies, transfers or liquidates cross-border assets or liabilities, including direct and portfolio investment, and a current account transaction as a receipt or payment not made to transfer capital.[1]

Current account: convertible, within limits

The taka was declared convertible for current account payments from March 1994, and authorised dealers have general authority to approve most outward current account remittances, in full or up to set limits.[3] Section 4(5), added in 2015, confirms that a resident may buy or sell foreign exchange for a current account transaction, subject to restrictions in the public interest.[1] Circular No. 40 states that its limits are indicative and that Bangladesh Bank will accommodate bona fide requests above them once the expense is shown to be genuine.[3]

Capital account: permitted case by case

Under section 4(6), Bangladesh Bank, in consultation with the government, specifies which capital account transactions are permissible.[1] Inward investment, approved foreign loans and repatriation of their proceeds are permitted through defined routes. Outward capital, such as equity abroad or lending to a non-resident, remains tightly restricted. Whether a payment is current or capital often decides whether a bank can process it the same day or must refer it to Bangladesh Bank.

Foreign exchange regulations Bangladesh exporters must follow

For exporters the core obligation is simple: declare the export and bring the full export proceeds home on time. Notifications of 1 July 1948 under section 12 of the Act prohibit exports unless the exporter declares that the full export value will be disposed of in the manner and time Bangladesh Bank specifies.[4]

Registration and the EXP form

Exporters must be registered under the Importers, Exporters and Indentors (Registration) Order 2023, and every export not exempted must be declared on an EXP form at full invoice value, without netting off agents' commission. EXP forms can be filed through Bangladesh Bank's Online Export Monitoring System, and within fourteen days of shipment the exporter must give the authorised dealer a signed hard copy with the customs-certified bill of export and shipping documents. An incorrect declaration is itself an offence.[4]

The four-month repatriation rule

The prescribed period for repatriating export proceeds is four months, under Bangladesh Bank Notification No. FE 1/77-BB of 16 April 1977. If full export proceeds are not received in that period without authorisation, the exporter faces action under the Act. Raw jute and jute goods may be exported on terms of up to 360 days on qualifying terms.[4] Banks must report doubtful buyers and connected-party relationships, and both exporters and banks can be held liable for delayed or short realisation of export proceeds.[4]

Retention quota accounts

Exporters may keep part of repatriated export proceeds in Exporters' Retention Quota (ERQ) accounts. Under the 2026 export circular, exporters of high domestic value-added goods may retain 30 per cent of repatriated FOB value, and exporters of goods with high import content, such as apparel made from imported woven fabric, 15 per cent, doubled from 7.5 per cent in July 2026. ICT service exporters may retain 50 per cent of net earnings, other service exporters 30 per cent, and agents 10 per cent of commission receipts.[4]

ERQ balances can be held in US dollars, sterling, euros, yen or Chinese yuan and used without prior approval for bona fide business purposes such as travel, trade fairs, offices abroad, imports of raw materials and machinery, and repayment of authorised foreign loans. Using them for investment abroad needs approval under the Overseas Equity Investment Rules 2022.[4]

Payment channels

Export proceeds may be received in freely convertible currency, including Chinese yuan, from non-resident taka accounts, through counter-trade escrow accounts, through internet acquiring services or through online payment gateway providers. The circular also consolidates the 2025 to 2026 freelancer and small-value e-commerce rules.[4] Licensing requirements are covered in our guide to import and export licensing in Bangladesh and by our export licensing and market access practice.

Foreign exchange regulations Bangladesh importers must follow

Imports are regulated by the Ministry of Commerce under the Import and Export (Control) Act 1950 and the Import Policy Order, while payments are governed by FEPD-1 Circular No. 30. Authorised dealers have general authority to remit against admissible imports, but importers must also meet customs, tax and anti-money laundering rules.[5]

Registration, reporting and pricing

Importers must be registered with the Chief Controller of Imports and Exports unless exempt. Banks report every permissible import to Bangladesh Bank's Online Import Monitoring System and, for non-government imports of USD 3 million or more, at least 24 hours before opening the letter of credit. They must check that the parties are bona fide and the price matches the international market, and proforma invoices must give full product details and an eight-digit HS code.[5]

The IMP form and the bill of entry

Payment requires an IMP form declaring that the payment is due, the price is the prevailing market price and the importer has no connection with the exporter. For intercompany imports the importer instead declares that the transaction is at arm's length and complies with transfer pricing rules. Where goods have not yet cleared, the customs-certified bill of entry must be produced within four months of applying for payment.[5]

Advance payments and deferred terms

Banks may make advance import payments without prior approval where the contract requires an advance and the supplier provides a repayment guarantee from a bank abroad. The guarantee may be waived for advances up to USD 20,000 if the importer has no overdue bills of entry.[5] Deferred-payment imports are allowed for set periods, typically up to 270 days for industrial raw materials and 360 days for spares, with usance interest capped at 3 percentage points over a benchmark such as SOFR.[5]

Banks that fail to settle import liabilities on time risk punitive action, including revocation of their dealer licence.[5] For the choice between letters of credit and transfers, see our analysis of LC versus TT payments in Bangladesh.

Outward remittances on current account

FEPD-1 Circular No. 40 consolidates the rules for outward remittances other than import and transport payments: travel, private remittances, profits and dividends, institutional payments, export claims, insurance and international cards.[3] Every purchase of foreign exchange starts with an application to an authorised dealer, on Form TM for non-import payments; where Bangladesh Bank approval is needed only the bank may apply, and an approval is valid for no more than 45 days unless it says otherwise.[3]

Travel, study and foreign employees

From 6 September 2026 an adult Bangladeshi resident may receive up to USD 18,000 a calendar year for travel abroad, up from USD 12,000, with no more than USD 5,000 in US dollar notes; children under 12 receive half.[7] A departing passenger may also carry up to Tk 10,000 in cash.[3] Banks may release foreign exchange for university, language and professional courses abroad on the institution's estimate, one academic year at a time, but school-level study needs prior Bangladesh Bank approval. Foreign nationals working in Bangladesh may remit up to 80 per cent of net income during the year and the rest after tax assessment.[3]

Profits, dividends and group charges

Circular No. 40 also governs dividends to non-resident shareholders, branch profits and service payments by subsidiaries of foreign companies, and reflects the Invest Bangladesh Act 2026 for royalty and technical fee payments. Dividend remittances go through one nominated bank, notified in advance to FEID, with auditor certificates on tax and divisible profit.[3] We cover the full exit sequence in our guide to capital repatriation in Bangladesh.

Inward remittances, foreign currency accounts and the surrender rule

Inward remittances are generally receivable through banking channels, but the regime controls what may be kept in foreign currency. Under a notification of 20 August 1958 under section 9 of the Act, citizens and persons resident for six months or more who acquire foreign exchange, in Bangladesh or abroad, must sell it to an authorised dealer within one month, subject to listed exceptions.[2]

The exceptions include foreign exchange held abroad by foreign nationals and businesses, other than earnings from activity in Bangladesh; accounts Bangladeshis opened abroad while working there as non-residents; retained ERQ amounts; and foreign exchange creditable to a Resident Foreign Currency Deposit account, including up to USD 5,000 brought in undeclared on return from abroad.[2]

Types of foreign currency account

Private foreign currency accounts may be opened without prior approval for Bangladeshis residing abroad, foreign nationals, foreign firms and missions, but earnings from business or services in Bangladesh cannot be credited to them. Residents may open RFCD accounts with foreign exchange brought in on return from travel, but not with export proceeds or commissions on Bangladeshi deals.[2] For Form C reporting, remittance incentives and the October 2026 NRCTA rules, see our guide to receiving foreign currency in Bangladesh.

Foreign investment and banking rules for foreign investors

For foreign investors, foreign exchange regulations Bangladesh enforces through its banks shape the structure as much as company law does. Equity comes in as a capital account inflow that must be traced and reported so that dividends and sale proceeds can later go out; debt comes in under separate approval rules. Our guides to how to invest in Bangladesh and the Invest Bangladesh Act 2026 explain the approval side.

Foreign borrowing

Borrowing abroad by private sector industrial enterprises, including supplier's credits, loans and foreign debt issues, requires prior authorisation from the Invest Bangladesh Authority, the successor to BIDA. Trade credit of up to one year follows the current commercial transaction rules instead.[6] Once a loan is approved, the bank through which it was received may remit interest, principal and charges without prior reference to Bangladesh Bank, after tax.[6] See our analysis of foreign loans to Bangladesh companies.

Local credit for foreign-owned companies

Banks may lend taka working capital to foreign-owned or controlled companies under normal credit norms. Foreign-owned manufacturing and service companies operating in Bangladesh for three years or more may take taka term loans for expansion and modernisation, provided total debt stays within a 60:40 debt-equity ratio.[6] Taka finance against overseas guarantees is explained in our note on overseas bank guarantees and SBLCs.

Outward investment and offices abroad

Outward investment is where the capital account remains most closed. Residents have no general right to buy foreign shares or set up subsidiaries abroad; they need a specific route.

Equity investment by exporters

The Capital Account Transaction (Overseas Equity Investment) Rules 2022, issued by the Financial Institutions Division in January 2022, allow exporters to invest abroad from ERQ balances with approval from a committee chaired by the Bangladesh Bank governor, applied for through an authorised dealer. The amount is capped by reference to average annual export earnings and audited net assets, and returns must be repatriated within thirty days of receipt.[12]

Start-ups, share swaps and offices abroad

Since March 2025 resident start-ups may remit up to USD 10,000 to set up a legal entity abroad, reporting to Bangladesh Bank within one month of incorporation, and Bangladesh Bank will consider share-swap acquisitions of foreign companies.[13] Residents other than banks and finance companies may open an office abroad without prior approval, reporting it within one month and remitting up to USD 30,000 a year for its expenses, but this route cannot fund a foreign subsidiary.[3]

The exchange rate regime: from crawling peg to market-based rate

Exchange rate policy matters legally because section 4 requires dealing at authorised rates. In May 2024 Bangladesh Bank moved the official rate from Tk 110 to Tk 117 per US dollar, and through 2024 it held a crawling peg mid-rate of Tk 117 with dealing inside a band.[10] [11]

The May 2025 shift

On 14 May 2025 Governor Ahsan H Mansur announced a move to a market-based exchange rate, while making clear that the dollar would not trade at any price.[9] The same day FE Circular No. 18 repealed the January 2025 circular on buying and selling spreads to give wider flexibility.[8] The government says the rate has since been market-determined, with a reference rate drawn from actual transactions within a band. The IMF, reporting in early 2026, called the framework incomplete, noting more than USD 2 billion of purchases between July and November 2025 to hold the rate near a preferred level.[10]

The practical lesson is to price contracts on the assumption that the rate can move and to hedge with the forward and swap products the circulars permit, not informal arrangements.

Penalties and enforcement

Breach of the foreign exchange regulations Bangladesh Bank enforces is a criminal matter, not only a banking one. Under section 23 of the Act, anyone who contravenes, attempts to contravene or abets a contravention is punishable with imprisonment of up to seven years, a fine, or both; the Foreign Exchange Regulation (Amendment) Act 2015 raised the maximum from four years. The court may also confiscate the currency, securities, gold, goods or other property involved.[1]

Offences are tried by a tribunal under section 23A, with every Sessions Judge acting as one, and an appeal lies to the High Court Division within three months. Section 24 places the burden of proving any required permission on the accused.[1] Regulatory consequences are more common: blocked remittances, overdue export bills reported to Bangladesh Bank and, for banks, sanctions up to revocation of the dealer licence.[4] [5] Payments through hundi also raise money laundering exposure, discussed in our guide to banking law in Bangladesh.

Common compliance mistakes to avoid

• Relying on the contract: an agreement to pay abroad does not authorise the remittance. Check the circular before signing.
• Mislabelling capital as current: loan repayments, intercompany advances and share consideration follow stricter capital account rules.
• Missing four-month windows: export proceeds and bills of entry each run on four-month clocks. Diary them per shipment.
• Undeclared related-party trade: intercompany imports need an arm's length declaration.
• Using expired rules: consolidated circulars lapse after a year and return with changes.

Foreign exchange regulations Bangladesh: key transaction rules compared

The table summarises how the main transactions are treated under the 2026 rules. On a phone, scroll it sideways.

Step by step: running a foreign exchange compliance check

Most problems can be prevented with a short review before money moves. This is the sequence we use when advising on the foreign exchange regulations Bangladesh Bank and the courts apply.

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How a FOREX lawyer in Bangladesh adds value

Many questions are settled at bank branch level. A specialist foreign exchange lawyer becomes useful when the answer is not in the circular, when a bank refuses or delays a transaction, or when a structure must work for years rather than for one payment.

TRW's work covers structuring inbound investment and shareholder loans so that capital and returns can be repatriated; drafting intercompany service, royalty and licensing agreements that meet remittance conditions; applications to Bangladesh Bank and the Invest Bangladesh Authority; overdue export bills and bill of entry problems; Bangladesh Bank inspections and show-cause notices; and defence of prosecutions under section 23. Our banking and finance practice and customs and trade compliance practice work together on these matters.

What to watch in 2026 and 2027

First, the consolidated circulars will be reissued again from July 2027, and each round has brought substantive change, such as the higher ERQ and travel limits of 2026. Second, the exchange rate framework remains under IMF scrutiny, and tighter foreign currency liquidity would test the commitment to flexibility.[10] Third, the Invest Bangladesh Act 2026 and the Invest Bangladesh Authority are now embedded in the borrowing and royalty rules.[3] [6] If you are planning a cross-border investment, restructuring group payments or facing a blocked remittance, contact TRW.

Frequently asked questions

What law governs foreign exchange in Bangladesh?

The Foreign Exchange Regulation Act 1947, together with government notifications under it and the circulars Bangladesh Bank issues to authorised dealers under section 20(3).[1]

What is the latest edition of the Guidelines for Foreign Exchange Transactions?

GFET 2018, reflecting instructions as of 30 November 2017. Its transaction rules have largely been replaced by annual consolidated circulars, while the Volume 2 reporting instructions remain in force.[2] [3]

Is the Bangladeshi taka fully convertible?

No. It has been convertible for current account payments since March 1994, but capital account transactions are permitted only where Bangladesh Bank specifies.[1] [3]

How long do exporters have to bring export proceeds home?

Four months as a general rule, with up to 360 days for raw jute and jute goods on qualifying terms.[4]

How much of their earnings can exporters keep in foreign currency?

Under the 2026 rules, 30 per cent for high value-added goods, 15 per cent for goods with high import content, 50 per cent for ICT service exporters and 30 per cent for other service exporters.[4]

How much foreign exchange can I take for travel abroad?

Up to USD 18,000 per calendar year for an adult resident from 6 September 2026, with no more than USD 5,000 in US dollar notes. Children under 12 receive half.[7]

Can a Bangladeshi company invest abroad?

Only through specific routes, mainly the Overseas Equity Investment Rules 2022 for exporters and the 2025 start-up facility of up to USD 10,000.[12] [13]

Does a foreign loan to a Bangladeshi company need approval?

Yes. Borrowing abroad by private sector industrial enterprises needs prior authorisation from the Invest Bangladesh Authority, though trade credit of up to one year follows separate rules.[6]

Is the exchange rate in Bangladesh market-based?

Bangladesh Bank announced a move to a market-based rate on 14 May 2025. The IMF reported in early 2026 that the framework was still incomplete because of intervention practices.[9] [10]

What is the penalty for breaching foreign exchange law?

Imprisonment of up to seven years, a fine, or both, plus possible confiscation of the property involved, under section 23 of the Act as amended in 2015.[1]