FOREIGN CURRENCY ACCOUNTS

FOREIGN CURRENCY ACCOUNTS

FOREIGN CURRENCY ACCOUNTS:FOREIGN CURRENCY A/C’S OF AUTHORIZED DEALER:

NOSTRO A/C:

The account which is maintained in abroad for settlement of receipts and payment regarding foreign exchange transactions is called Nostro Accoount. In brief, our account with them is called Nosrto Account.

VOSTRO A/C:

The account which is maintained in our country for settlement of receipts and payment regarding foreign exchange transactions is called Vostro Account. In brief, their account with us is called Vostro Account.

LORO A/C:

The account of third party maintained in domestic or Foreign Currency is called LORO Account.

FOREIGN CURRENCY ACCOUNTS OF THE ADS AND PURCHASE AND SALE OF FOREIGN CURRENCY:

Account in

Foreign

Currencies

Authorized Dealers, may maintain accounts in freely convertible currencies with their correspondents / branches abroad. Account may also be maintained in ECU for the purpose of investment of surplus fund, if any, of the ADs.

 

Foreign currency held by the AD at the disposal of the Bangladesh Bank The foreign currencies held by the ADs shall at all time be deemed to be held at the disposal of the Bangladesh Bank. The Bangladesh Bank, through its Foreign Exchange Policy Department, may give such instruction with regard to the disposal of such currencies as it may deem necessary and expedient.

 

Open position The Bangladesh Bank sets prudential limits on each AD bank’s open (overbought / oversold) exchange position. The AD should ensure that the prescribed open position limit is not exceeded. If an AD exceeds the prescribed limit and fails to furnish satisfactory explanation for the same, it may be asked to sell the excess amount ready and to cover its position by buying forward for deliveries corresponding to the maturities of its own forward obligations. In general, the ADs should aim at maintaining their ready and forward positions month by month reasonable in line, avoiding heavy ready purchases against forward commitments.

 

Overbought/

oversold

position in

excess of

prescribed limits

The ADs are required to work out their open exchange position daily and to report to the Bangladesh Bank the positions (overbought/oversold) as at the close of business on Thursday of each week. If for reasons beyond control the overbought/oversold position during the period under report is in excess of the prescribed limit, the weekly return must be accompanied by a letter explaining the circumstances.

 

 

Purchase of one foreign currency against another The ADs may freely enter into transactions for sale or purchase of foreign currencies both ready and forward with other ADs, foreign correspondents and overseas branches provided that all such transactions must be reported to the Bangladesh Bank in the appropriate returns.

 

The ADs may obtain short term loans and overdrafts for a period not exceeding 7 days at a time at the going market rates from overseas branches and correspondents to meet their short term needs. If these loans or overdrafts require a collateral in Bangladesh Bank or abroad prior approval must be obtained from Bangladesh Bank. Short term loans and overdrafts taken under the authority of this para may be remitted by the ADs without the prior approval of the Bangladesh Bank, but subject to report.

 

Foreign Currency A/C under WES : ( At a glance  FC A/C Under WES)

  1. Bangladesh nationals working and earning abroad including self-employed, Bangladeshi immigrants proceeding abroad on employment may open F.C. accounts without initial deposit.
  2. Account holder themselves or their nominated person in Bangladesh can operate the accounts.
  3. The account can be opened either in US Dollar, Pound Sterling, Euro, Deutsche Mark or Japanese Yen at the option of the prospective holder.
  4. These accounts would ordinarily be fed from the remittances by the account holders themselves & fund sent by other wage earners may also be placed to the credit of such account.
  5. AD branch may also raise credit to such accounts with proceeds of convertible foreign exchange i.e. currency notes, travelers cheques, drafts etc brought into Bangladesh by the account holders while on temporary visit in Bangladesh, provided such foreign exchange in excess of US$ 5000/- or equivalent has been duly declared by them to the custom authority on FMJ Forms at the time of their arrival.

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