Central Bank Relaxes Foreign Capital Repatriation Rules

In a decisive move to bolster foreign direct investment (FDI) and enhance the ease of doing business, Bangladesh Bank has significantly eased the regulations governing the repatriation of capital by foreign investors. Under the new directive, foreign shareholders may now transfer proceeds from the sale of shares in non-listed companies—both public and private—up to a threshold of 100 crore BDT (approximately £6.6 million) without seeking prior case-by-case approval from the central bank.

A Tenfold Increase in Autonomy

Previously, commercial banks were only authorised to process such repatriations independently for amounts up to 10 crore BDT. By increasing this limit tenfold, the central bank aims to eliminate the bureaucratic bottlenecks that have historically deterred international investors. This liberalisation ensures that as long as the "fair value" of the shares is determined by an independent valuer using prescribed methods, commercial banks can execute the transfer autonomously.

Streamlining the Valuation Process

To maintain transparency while reducing red tape, the central bank has introduced a tiered approach to valuations. For smaller transactions not exceeding 1 crore BDT, a formal independent valuation report is no longer mandatory, significantly lowering the administrative cost for minor exits.

Furthermore, if the sale value does not exceed the Net Asset Value (NAV) based on the latest audited financial statements, banks are permitted to process the repatriation regardless of the total amount, providing a "green channel" for exits priced at or below book value.

Standardised Valuation and Timelines

The circular aligns domestic practices with International Valuation Standards, mandating three primary methodologies for determining share prices:

Net Asset Value (NAV) Method

Market Approach

Discounted Cash Flow (DCF) Method

To ensure data integrity, audited financial statements used for valuation must be no older than six months from the date of the Memorandum of Understanding (MoU). If the statements are outdated, an interim audit is required.

Key Changes to Repatriation Limits and Procedures

Governance and Accountability

To ensure the integrity of these high-value transfers, commercial banks must establish internal committees. Transactions up to the new 100 crore BDT limit must be vetted by a committee led by the Chief Executive Officer (CEO), while smaller transfers fall under the Chief Financial Officer (CFO). These committees must include professionally certified members, such as Chartered Financial Analysts (CFA), to verify the rigour of the valuation reports.

Once an MoU is signed or central bank approval is granted, the entire share transfer process must be completed within 45 days, with the central bank being notified of the transaction within a fortnight. This structured timeline is expected to provide the predictability that global institutional investors demand.