Cross-Border Finance and Foreign Borrowing in Bangladesh
Foreign borrowing advice for Bangladesh companies, project sponsors and their overseas lenders, parents and investors: we identify the correct approval route, align the facility with Bangladesh Bank rules and plan drawdown, security, tax and repayment before documents are signed and any funds move.
- Initial route review
- Align the documents
- Approval and registration
- Ongoing compliance support
How foreign borrowing works for Bangladesh companies
Foreign borrowing can give a Bangladesh business longer tenors, larger amounts or keener pricing than local banks, but it brings a regulatory layer that domestic lending does not. Before drawdown, the borrower needs to know which approval or permission route applies, whether the facility terms fit within it, how funds will be received and repaid through an authorised dealer bank, and what must be reported along the way. We advise Bangladeshi borrowers, foreign parents, development finance institutions and international lenders on that process from term sheet to final repayment, as part of our corporate and finance practice.
Bangladesh Bank sets the foreign exchange framework for external loans, guarantees and related payments under the Foreign Exchange Regulation Act 1947. In September 2026 it consolidated its rules on loans, overdrafts, guarantees and external borrowings into a single circular, and a separate July 2026 circular set a conditional route for borrowing by certain fully foreign-owned industrial enterprises from their parents, associates and shareholders. These changes do not remove the need to test each facility against the borrower's category, the lender, the purpose, the tenor and the all-in cost. Older guidance and precedent documents should not be relied on unchecked.
The institutional picture also changed in 2026. Under the Invest Bangladesh Act 2026, BIDA, BEZA and the PPP Authority were merged into Invest Bangladesh, which has operated since 23 August 2026. Functions that BIDA previously performed for foreign borrowing by industrial and commercial enterprises now sit within that new framework, read with Bangladesh Bank's rules. Enterprises in BEPZA zones and Hi-Tech Parks continue to deal with their own authorities, which remain separate. Identifying the correct body at the outset avoids applications being returned and lenders' conditions precedent remaining open for weeks. Lenders now ask about this routinely.
Commercial terms and regulatory terms are closely linked. The interest margin, fees, default interest, prepayment premium and currency of a foreign loan can each affect whether it fits the applicable route. Security over Bangladesh assets, offshore guarantees and standby letters of credit raise their own legal questions. On tax, the Finance Act 2026 reduced withholding on interest paid to non-residents to 10%, from 20%, and a double tax treaty may reduce it further if its conditions are met. Barrister Tahmidur Rahman leads our finance work, with Barrister Remura Meheruba Mahbub advising on banking and foreign investment issues.
We act on parent and shareholder loans, bilateral and syndicated facilities from foreign banks, development finance and export credit facilities, supplier credit and refinancing of existing external debt. We work with lenders' counsel in the UK, US, UAE, China, India and Singapore, and give the Bangladesh law opinions that international lenders usually require. Where a foreign borrowing has run into problems, such as a delayed approval, a disputed repayment or a missed report, Adv Syed Wahid and our dispute resolution team can advise on the contentious side. Initial enquiries can be made through our Dhaka office in Mohakhali DOHS.
Core workstreams
Four clear stages
- 01Initial route review
- 02Align the documents
- 03Approval and registration
- 04Ongoing compliance support
Talk to a partner
Consultations in Dhaka or by video. Scope, team and fees are agreed in writing first.
Book →Our foreign borrowing work
Route and eligibility assessment
- Initial route review
- Align the documents
- Approval and registration
- Ongoing compliance support
Approval applications and filings
- Initial route review
- Align the documents
- Approval and registration
- Ongoing compliance support
Facility agreement review
- Initial route review
- Align the documents
- Approval and registration
- Ongoing compliance support
Security and credit support
- Initial route review
- Align the documents
- Approval and registration
- Ongoing compliance support
Parent and shareholder loans
- Initial route review
- Align the documents
- Approval and registration
- Ongoing compliance support
Lifecycle, amendments and refinancing
- Initial route review
- Align the documents
- Approval and registration
- Ongoing compliance support
Route and eligibility assessment
We start by establishing which approval, permission or reporting route applies to the proposed foreign borrowing. That depends on the borrower's ownership and sector, its zone status, the type of lender, the purpose of the funds, the tenor and the all-in cost. We set out what is required, which authority handles it, what supporting documents will be needed and where the realistic timing risks lie. Alternatives are considered where needed.
Approval applications and filings
We prepare and manage applications to Bangladesh Bank, Invest Bangladesh or the relevant zone authority, along with the board resolutions, financial statements, project information and loan summaries that each process requires. We liaise with the authorised dealer bank on registration and reporting, respond to regulatory queries, and keep lenders informed so that conditions precedent can be satisfied efficiently and drawdown is not unnecessarily delayed. Every filing is tracked centrally.
Facility agreement review
We review and negotiate facility agreements, often based on LMA or lender standard forms, from a Bangladesh law and regulatory perspective. Our focus is on terms that can conflict with local rules or approval conditions: pricing and fees, currency, tax gross-up, increased costs, prepayment, default interest, events of default, governing law and jurisdiction, and the mechanics for drawdown and repayment through Bangladesh banks. Lender counsel receive consolidated comments.
Security and credit support
We advise on security packages for foreign loans, including mortgages over land and buildings, hypothecation of plant and receivables, share pledges, assignment of contracts and accounts, and corporate guarantees. Where support comes from offshore, such as a parent guarantee or standby letter of credit, we consider how it interacts with Bangladesh foreign exchange rules, stamp duty, registration requirements and the enforcement steps lenders would face. Perfection steps are scheduled before drawdown.
Parent and shareholder loans
Many foreign groups fund their Bangladesh subsidiaries with a combination of equity and intercompany debt. We advise on whether a shareholder loan fits the current conditional route for fully foreign-owned industrial enterprises or another permission, how it should be structured, priced and documented, how interest and principal can be remitted, and how the debt sits alongside transfer pricing rules, thin capitalisation concerns and any future conversion to equity.
Lifecycle, amendments and refinancing
A foreign borrowing does not end once funds arrive. We advise borrowers and lenders on periodic reporting, amendments to tenor or pricing, rescheduling, prepayment, refinancing and changes of lender, each of which may need fresh approval or notification. Where a facility is in difficulty, we advise borrowers and lenders on restructuring options, standstill arrangements and enforcement against Bangladesh assets, with our litigation team involved when proceedings become likely.
Partner-led, on every matter.
Corporate & Finance matters at TRW are led by partners, supported by associates, with one responsible lawyer from first advice to final outcome.
Meet the firm →01Does every foreign borrowing by a Bangladesh company need prior regulatory approval?
Not always, but every foreign loan needs to fit a recognised route. Bangladesh Bank's framework distinguishes between categories of borrower, lender and facility. Some loans need specific prior approval, some fall within general permissions subject to stated conditions, and some short-term trade-related credit follows separate rules. Even where no specific approval is required, registration with or reporting through the authorised dealer bank is usually needed before funds are received or repaid. Because the rules were consolidated in September 2026, it is worth checking the current position rather than relying on an earlier transaction or precedent.
02Who approves foreign borrowing now that BIDA has been replaced?
Since 23 August 2026, BIDA, BEZA and the PPP Authority have operated as a single body, Invest Bangladesh, under the Invest Bangladesh Act 2026. Functions BIDA previously had in relation to foreign borrowing by industrial and commercial enterprises now sit within that framework, alongside Bangladesh Bank's foreign exchange rules. Enterprises in BEPZA zones and Hi-Tech Parks continue to deal with their own authorities. The correct foreign borrowing route depends on the borrower and the loan. We confirm the applicable body and process before preparing any application, because transitional practice can still vary in individual cases.
03Can our foreign parent company lend directly to our Bangladesh subsidiary?
Yes, often. Parent loans are a common form of foreign borrowing. A July 2026 Bangladesh Bank circular set out a conditional route for certain fully foreign-owned industrial enterprises to borrow from parent companies, associates and shareholders. It does not apply to every borrower, and its conditions on terms, documents and reporting must be met. Joint ventures, commercial companies and enterprises outside the qualifying categories may need a different route. We assess eligibility, draft a loan agreement that reflects the conditions, and set up the remittance and reporting steps with the authorised dealer bank before any funds are transferred to Bangladesh.
04What loan terms most often cause problems with foreign borrowing approvals?
The all-in cost, the tenor and the purpose are the usual pressure points in practice. Regulators look at interest margin, upfront and commitment fees, agency fees and other charges together, and some routes set limits or expectations for them. Default interest, make-whole payments and broad increased-cost clauses can also attract questions. A foreign borrowing approved for one purpose cannot simply be redirected to another. We review the term sheet early so that the commercial terms and the regulatory terms are aligned before the lender's credit approval is finalised and documents are circulated for signature.
05Can foreign banks and other lenders take security over assets in Bangladesh?
Yes. Foreign lenders in Bangladesh commonly take mortgages over land and buildings, hypothecation over plant, machinery, stock and receivables, pledges of shares and assignments of key contracts and accounts. Practical issues include stamp duty, registration of charges with the Registrar of Joint Stock Companies, land registration, the use of a local security agent and the time enforcement can take in Bangladesh courts. Some security arrangements, and guarantees given by Bangladesh residents for foreign obligations, can raise separate foreign exchange questions. We advise on a security package that is realistic to perfect and to enforce.
06How is interest on a foreign borrowing taxed in Bangladesh under current law?
Interest paid by a Bangladesh borrower to a non-resident lender is generally subject to withholding tax at source. Under the Finance Act 2026, the rate on interest paid to non-residents is 10%, reduced from 20%. A double tax treaty between Bangladesh and the lender's country of residence may allow a lower rate if the lender provides the required evidence of residence and entitlement. Tax gross-up clauses in the facility agreement determine who bears any withholding. Deductibility of interest and transfer pricing for related-party loans also need attention, so we coordinate with the borrower's tax advisers.
07Can a foreign loan to a Bangladesh company be denominated or repaid in Taka?
Most foreign borrowing by Bangladesh companies is in US dollars or another major currency, which leaves the borrower with currency risk. Taka-linked or Taka-settled structures are sometimes discussed, particularly with development finance institutions, but they raise specific regulatory, documentary and hedging questions and are not available as a matter of course. Hedging currency exposure through Bangladesh banks is subject to Bangladesh Bank rules on derivatives. We advise on what is permitted for the particular borrower and help the parties document the currency, payment and hedging arrangements in a way that matches the approval.
08What should we do if a foreign borrowing was drawn without the correct approval?
Act early and avoid making further payments until the position is understood. The first step is to establish what was approved or reported, what was actually drawn and repaid, and through which bank. In some cases the authorised dealer bank or Bangladesh Bank may accept a regularisation application with an explanation; in others, the loan may need to be restructured or repaid through a permitted channel. Tax and accounting consequences should be reviewed at the same time. We handle these foreign borrowing reviews confidentially and help prepare any submission to the regulator with the client's auditors.
From first call to resolution.
- 01
Initial route review
We review the term sheet, the borrower's ownership and status, and the purpose of the funds, then confirm the applicable foreign borrowing route, the authority involved and the documents that the process will require. A short written note follows.
- 02
Align the documents
We review and negotiate the facility, security and intercreditor documents with the lender's counsel so that pricing, tenor, currency and repayment terms match the approval route and Bangladesh law, and prepare the required board approvals. Any mismatch with the approval conditions is raised with the lender's counsel straight away rather than at signing.
- 03
Approval and registration
We file applications or registrations with Bangladesh Bank, Invest Bangladesh or the zone authority, respond promptly to queries, and coordinate with the authorised dealer bank so that conditions precedent can be satisfied and drawdown proceeds. We update lenders on progress so that approvals, conditions precedent and drawdown dates stay aligned.
- 04
Ongoing compliance support
After drawdown we support routine reporting, interest and principal remittances, amendments, prepayment and refinancing, and advise promptly if a payment is delayed, an approval condition changes or a dispute with the lender arises. All records are kept complete.
“Demonstrates an extraordinary command over both domestic litigation and international arbitration.”
The Legal 500 Asia Pacific, Bangladesh: Dispute resolution, client feedback
Related reading.
Foreign Loans for Bangladesh Businesses: Who Approves What After the September 2026 Changes?

Foreign Loan Approval in Bangladesh 2026: Invest Bangladesh, Bangladesh Bank and the Scrutiny Committee
Equity or a Parent-Company Loan? How to Fund Your Bangladesh Subsidiary

Withholding Tax (TDS) in Bangladesh 2026: Rates and Obligations
All insights →
What counts as foreign borrowing in Bangladesh?
Which law governs foreign borrowing by Bangladesh companies?
Can a facility agreement for a Bangladesh borrower be governed by English law?
How long does foreign borrowing approval usually take?
Can foreign borrowing be used to repay an existing local bank loan?
Do Bangladesh startups and service companies have access to foreign borrowing?
What reporting continues after a foreign loan is drawn?
Who leads foreign borrowing matters at TRW & Co?
Arrange foreign funding on a sound legal footing
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