In a single word, yes, a company established in Bangladesh can apply for a loan from a foreign company. However, the process to apply and receive a such loan is different for different types of ownership of the company and the nature of the business. We discussed everything about how Can a Bangladeshi company take foreign loan.

Loan from foreign entity

A loan from a foreign entity

What is the Process of getting a foreign loan?

A company established in Bangladesh can apply for a foreign loan by following the process mentioned below.


The Process to obtain a foreign loan by 100% National Ownership Company


In light of Chapter 15, Page 164 of the 2018 Guidelines, All proposals for borrowing from abroad by private sector industrial enterprises in Bangladesh (including supplier’s credits, financial loans from institutions or individuals and debt issues in capital markets abroad) shall require the prior authorisation of the Bangladesh Investment Development Authority(BIDA). In each case of supplier’s credit/loan from abroad approved by BIDA, a copy of the loan agreement should be forwarded by the concerned AD to FEPD, FEID & Statistics Department, Bangladesh Bank, Head Office, Dhaka. Along with the application, the applicant company needs to submit the following documents:

  1. Certified copy of the Memorandum and Articles of Association,
  2. Board of Director’s Resolution in favour of the loan proposal,
  3. Proforma Invoice of machinery to be imported, and any documents that BIDA may ask for any specific reasons.

In addition to the above criteria, the following matters also need to be considered:


Repayment instalments of interest


Repayment instalments of interest and principal against the loans from abroad availed of in terms of general/specific authorisation of the BIDA may be remitted abroad by the ADs without prior reference to Bangladesh Bank.


Medium/long-term loans by industrial enterprises in Export Processing Zones/Economic Zones


If any industries established within EPZs/EZs want to take foreign loans then the following criteria need to be followed:

  1. Industrial units in the EPZs/EZs will submit approval applications for foreign loans and related documents mentioned above through their nominated Authorized Dealer banks for onward referral via BEPZA/BEZA to Bangladesh Bank, Head Office.
  2. AD banks will forward the applications to BEPZA/BEZA, after satisfying themselves with the completeness of the applications and accompanying documents, as also as prima facie correctness of data/information provided in the applications.
  3. The BEPZA/BEZA, after perusal of borrowing approval applications forwarded by ADs, will in turn forward these onward to General Manager, FEID, Bangladesh Bank Head Office, Dhaka; with such observations/remarks as deemed necessary
  4. The borrowing proposals forwarded to Bangladesh Bank by the BEPZA/BEZA will be scrutinized at the FEID. The decisions taken by Bangladesh Bank in this regard will be communicated simultaneously to the BEPZA/BEZA, the applicant EPZ/EZ units, and their Ads concerned.

Reporting of Foreign Loans approved by BIDA/Bangladesh Bank


The Concerned AD bank through their respective head office will have to submit a consolidated quarterly statement, within 15 days of the end of each quarter of a year, to the General Manager, FEID, Bangladesh Bank.


The Process to obtain a foreign loan by a 100% Foreign Ownership Company


A company established in Bangladesh with 100% foreign Ownership can take a loan from another foreign company or from its parent company. This type of company can take a loan in foreign currency from foreign companies by considering the following factors:


Foreign Companies within EPZs/EZs areas


A company with 100% foreign ownership within the EPZs/EZs area is a Type A company and the meaning of Type A company can be found in Chapter 8, Page 67 and Chapter 20 Page 191 of the 2018 Guidelines. A Type A company can take 3 (three) types of loans and these short-term loans, medium-term loans and long-term loans.

Type A company can easily take a short-term loan in foreign currency from its parent company as direct short-term working capital for up to 6 years directly into its FC account. In this regard, Type A company does not need any prior permission from the Bangladesh Bank to take this loan. However, in light of Chapter 16, Page 175, Clause 26 of GFET (Vol 1) 2018 is referring to Chapter 15, Page 165, Clause 7 and Circular Letter No. 03/2014, the process to apply the long term loan from the parent company by the A Type Company does require the Bangladesh Bank’s prior approval.


What are the Foreign companies outside of EPZs/EZs areas in Bangladesh? 


In light of the Bangladesh Bank’s FE Circular No.- 4 dated 19.01.2021 a company established in Bangladesh under foreign investment can take a short-term loan as a working capital loan in convertible foreign currencies directly from its parent company for the period of 6 (six) years from the date of inception of manufacturing and/or service output activities. In this regard, the company established in Bangladesh can open an FC account to bring foreign currency through its AD Bank. The AD Bank will issue a certificate by mentioning the foreign currency conversion rate in Taka.


What is the process to obtain a foreign loan through Joint Venture projects? 


A joint venture project or company means a Joint venture between foreign investors and Bangladeshi entrepreneurs resident in Bangladesh. This type of company can take a loan in foreign currency from foreign companies by considering the following factors:


Joint Venture Projects within EPZs/EZs areas


A company with joint ownership between foreign investors and Bangladeshi enterprises resident in Bangladesh within the EPZs/EZs area is a Type B company and the meaning of Type B company can be found in Chapter 8, Page 67 and Chapter 20 Page 191 of 2018 Guidelines. According to Chapter 16 and Chapter 20 of the 2018 Guidelines, Type B industries (joint venture projects) may also obtain such loans subject to conditions applicable to Type A industries as mentioned above.

In the case of joint venture (Type B) projects in the EPZs, the foreign partners will have to arrange their contributions in foreign exchange from their own or borrowed sources outside Bangladesh and the local partners shall contribute their shares in local currency. In the event, however, the contributions as per joint venture project agreements made by the foreign partners and authorised foreign loan are not sufficient to cover the cost of machinery and equipment, the shortfall may be made up by conversion of Taka into foreign currency up to an amount not exceeding the local partners’ shares/contributions and authorised local loan for procurement of capital machinery.


Joint Venture Project outside EPZs/EZs areas.


Joint venture companies can take loans from foreign companies and in that case, the loan will be operated according to the agreement between the foreign investors and the Bangladeshi investors. Other than that, this joint venture company can also apply for a loan in Taka from the scheduled bank.




It is clear from the above analysis that the company established in Bangladesh can take a loan from the foreign parent company by maintaining certain rules and regulations and by following the guidelines provided by the Bangladesh Bank. Bangladesh’s government is trying to make the process easy so that foreign investors feel easy to invest in Bangladesh.

Counsels Law Partners (CLP)  is a full-service law firm which has been dealing with all types of Foreign Investment related issues through its competent and experienced lawyers. Therefore, if you need any assistance or consultation, visit us at our office or feel free to contact us at +8801700920980 (WhatsApp) or via Email- .


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