The Bangladesh Bank has relaxed foreign payment regulations for small and medium enterprises (SMEs), allowing them to remit up to $3,000 annually for legitimate current expenses abroad.

The central bank, through a circular issued yesterday (5 October), said the remittances may be made either via traditional banking channels or through international cards.

To access the facility, SMEs must be registered with the SME Foundation.

As part of the move, banks have been permitted to issue refillable international cards, termed "SME Cards," to a nominated official of each enterprise.

An SME Card can be initially loaded with up to $600, primarily to cover online payments for bona fide expenses.

However, the overall ceiling for an SME, combining both card transactions and direct remittances, remains capped at $3,000 per year.

Business insiders said the step will help SMEs settle overseas payments more efficiently and with less procedural hassle, potentially boosting their participation in cross-border trade and services.

Instructions

The central bank said authorised dealers (ADs) must adhere to several instructions – ADs shall ensure that the SME is duly registered with the SME Foundation; for online bona fide current payments by SMEs, ADs may issue refillable international cards with $600 or equivalent to the nominated official of the enterprise within the limit.

Bangladesh Bank also said that outward remittances related to royalty, technical knowledge/know-how fees, technical assistance fees and franchise fees will be governed by the guidelines of Bida, and that the authorisation under the circular does not apply to these purposes.

"Transactions under this authorisation shall be executed by a single AD bank branch nominated by the remitter. Any request to change the AD branch shall be submitted in writing by the respective enterprise, and relevant files shall be transferred directly to the new branch," a BB official told TBS.

He added that ADs have to exercise a customer's due diligence, including deduction and payments of applicable taxes at source, VAT and other levies, and adherence to KYC norms.