Foreign loan in Bangladesh

Foreign loan in Bangladesh

Obtaining foreign loan in Bangladesh is a common phenomenon nowadays. Bangladeshi borrows prefers foreign loan for various reasons including lower interest rate and availability of large amount from a single lender.


Though every foreign lender has its own criteria, the following list contains some of the common requirements of a foreign lender:

Borrower has all licenses, permits to conduct its business.

All corporate records of the borrower are up-to-date.

Borrower is an environmentally compliant company.

Borrower has obtained all industry standard certification (e.g. ISO certification).

Borrower is a labour law compliant company with no child labour.

Borrower or the project is properly insured.


Foreign lenders usually conduct strict due diligence on borrower. The financial due diligence is usually conducted by the lender itself, however, for technical, environmental and legal due diligence, lender might appoint external consultants. The cost of these consultants will have to be borne by the borrower.

Lender might require the borrower to appoint – i) a process agent in a country of its choice; ii) an auditor with affiliation with an international auditing firm; and iii) a compliance manager. The auditor and compliance manager might require submitting timely report directly to the lender after disbursement.


Foreign loans with a tenor of less than a year require specific approval from Bangladesh Bank. All other foreign loans (including supplier’s credits, financial loans from institutions or individuals and debt issues in capital markets abroad) must be approved by the Board of Investment (BOI). Certain exemptions are available for borrowers located in special economic zones such as the EPZs (Export Processing Zone).

The BOI approval usually takes between three to six months. The application has to be made using a prescribed application form which, along with the supporting documents, should clearly set out details of the loan, including among others, its purpose and intended use by the borrower, repayment schedule with dates and amounts, interest payment dates and amounts. The following documents are required to be submitted as supporting documents to the application:

loan documentation, including the term sheet, facility agreement and security documents. These may be submitted in draft form;

corporate documents of the borrower including memorandum and articles of association of the borrower; resolutions of the Board of the directors of the borrower approving the foreign loan on the terms and conditions reflected in the loan documentation and the application;

if the loan is to be used for the purpose of importing any equipment, pro-forma invoice for that equipment;

report covering key financial and commercial matters in respect of the loan and related project

Once BOI approves an application, no other permission will be required to make repayment of principal and interest.