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Bangladesh’s foreign exchange regime has entered a new regulatory phase with the issuance of a master circular dedicated exclusively to outward remittances. Released on September 30, 2025, as FE Circular No. 37, this directive consolidates decades of fragmented instructions, clarifications, and operational guidelines into a single authoritative framework. Unlike earlier piecemeal notifications, which often required banks, exporters, and remitters to navigate multiple reference points, the master circular creates a comprehensive code of conduct for all transactions relating to outward remittances. Its timing is also noteworthy, coming on the heels of Bangladesh Bank’s master circulars on export, import, and loans and guarantees, thereby completing the cycle of core external sector regulations. By excluding import payments and remittances for transport services, the circular clearly draws boundaries around its scope, leaving no ambiguity about what falls within its jurisdiction.

At its core, the circular recognizes the multifaceted nature of outward remittances in a rapidly integrating economy. Bangladesh is no longer a one-way remittance-dependent country that only receives funds from abroad. The economy now requires a robust framework for legitimate outward payments covering travel, education, business, family support, asset transfers, and service payments. The circular’s structure reflects this evolution, providing detailed guidance on categories ranging from recurring remittances and travel-related expenses to profit repatriation by foreign companies, royalty payments, insurance settlements, and digital service-related remittances. This expansion signals the central bank’s recognition that outward flows are as essential for sustainable economic growth as inward receipts.

One of the key features is the codification of procedures for reporting, applications, and approvals. Authorized dealers (ADs) banks, are entrusted with significant responsibility in processing requests, ensuring compliance, and monitoring end-use. The circular lays down clear formats for reporting forms, specifies how applications must be lodged, and defines the procedures for dealing with approved applications. This reduces discretion at the operational level and standardizes practices across the banking system. Equally important is the emphasis on timelines, such as the period of validity of Bangladesh Bank’s approvals, procedures for disposal of application forms, and even conditions under which outward remittances may be cancelled. Such streamlining not only reduces transaction costs for clients but also strengthens regulatory oversight.

The travel-related provisions form one of the most visible aspects of the master circular. It details the release of foreign exchange for personal travel abroad, travel on medical grounds, official or semi-official visits, participation in seminars and training, and even special cases like Hajj and Umrah. The inclusion of business travel quotas for exporters, manufacturers, and importers demonstrates an understanding of the operational needs of firms engaged in cross-border activities. At the same time, instructions regarding disposal of unspent foreign exchange by returning residents and reconversion of unspent Taka into foreign exchange by foreign tourists indicate a meticulous attention to currency circulation.

The circular also addresses areas with rising importance in a globalized economy. For instance, it provides guidance on outward remittances relating to family maintenance, study abroad, correspondence courses, membership fees, and immigration-related expenses. Such detailed coverage underscores the regulatory intent to ensure that legitimate outward payments for personal and educational purposes are facilitated smoothly while preventing misuse. Particularly notable is the authorization for remittance of publication fees for international journals and IT-related expenses through virtual cards. These provisions reflect an awareness of Bangladesh’s growing integration into knowledge economies, where international exposure, digital services, and research publications are integral to competitiveness.

Corporate and institutional outward remittances are covered in even greater detail. The master circular codifies rules for remittance of profits by foreign companies and financial institutions, payment of dividends to non-resident shareholders, and head office expenses of subsidiaries. It goes further to regulate remittances related to consultancy services, royalties, franchise fees, training costs, advertising abroad, and expenses for opening branches overseas. This wide net ensures that foreign investors and local firms with international operations have a predictable legal framework for moving funds. By requiring adherence to the Bangladesh Investment Development Authority Act, 2016, in cases of royalties and technical assistance, the circular also ties outward remittances to the country’s investment promotion and monitoring apparatus.

Digitalization and new forms of service trade find explicit recognition. The circular introduces clear provisions for remittances by IT/software firms, e-commerce operators, and even foreign brokerage firms providing services to portfolio investors in Bangladesh. It allows payments for webinar solutions, subscriptions to foreign media services, bandwidth/internet costs, and software maintenance including IT infrastructure. For a country aspiring to boost its IT-enabled services exports and digital economy, this recognition of outward obligations is a forward-looking step. Similarly, remittances for international card usage, both for travel and permissible service payments, are carefully outlined, providing a balance between flexibility for users and reporting requirements for banks.

Insurance, reinsurance, and claim settlement also receive dedicated sections. Rules for outward remittances against marine insurance claims, life and non-life insurance settlements, reinsurance premia, and related expenses are clarified. This brings much-needed uniformity in a sector that often operates under complex cross-border arrangements. For banks, guidelines on remittances for legal expenses abroad, project-related costs, and general average payments help reduce regulatory uncertainty.

The circular also integrates special categories such as remittances for Hajj and Umrah, transfer of retirement benefits of foreign nationals, and settlement of legacies from deceased estates. These are socially sensitive areas where clarity prevents both delays and potential disputes. By explicitly codifying them, the central bank ensures that individuals and families can access legitimate channels rather than resorting to informal means.

From a macroeconomic perspective, the issuance of this master circular is significant for several reasons. First, it reduces regulatory fragmentation. Earlier, banks had to shift through numerous notifications issued over decades, many of which overlapped or even contradicted each other. Consolidation eliminates this confusion and provides a single reference point. Second, it enhances compliance. When rules are scattered, enforcement is weak. A unified circular improves monitoring, both by the central bank and by commercial banks tasked with day-to-day implementation. Third, it strengthens transparency and investor confidence. Foreign firms, multilateral partners, and domestic stakeholders now have a clear roadmap of what is permissible, reducing regulatory risk.

The circular also highlights the growing maturity of Bangladesh’s foreign exchange management. In earlier decades, foreign exchange regulations were designed primarily to conserve scarce reserves and control outflows. Today, with a larger and more diversified economy, the emphasis is shifting towards managing flows efficiently rather than merely restricting them. By covering a wide range of outward payments while maintaining due safeguards, Bangladesh Bank is signaling its readiness to embrace a more liberal yet regulated foreign exchange regime.

Nevertheless, challenges remain. The effectiveness of the master circular will depend on how authorized dealers execute their responsibilities. Overly cautious interpretations by banks could create bottlenecks for legitimate remitters, while lax enforcement could open avenues for misuse. The central bank will need to back up the circular with training, digital reporting platforms, and close supervision. Furthermore, as cross-border payments evolve with fintech innovations and digital currencies, periodic updates will be necessary to keep the framework relevant.

The issuance of FE Circular No. 37 marks a regulatory milestone in Bangladesh’s external sector management. By consolidating a vast range of instructions into one coherent framework, the central bank has not only simplified procedures but also elevated the foreign exchange regulatory environment to match the country’s evolving economic profile. It is a step that balances facilitation with oversight, liberalization with prudence. For exporters, students, families, foreign investors, and banks alike, the new circular provides clarity and certainty. For the banking system, it reduces ambiguity and strengthens compliance. And for the economy as a whole, it represents a maturing outlook that recognizes outward remittances not as drains, but as necessary conduits in a globally connected Bangladesh.