FAQ , Foreign Borrowing

What are the procedures to be performed to obtain the prior permission of BIDA to avail foreign loan?

Oct 11, 2021

What are the procedures to be performed to obtain the prior permission of BIDA to avail foreign loan? • Prior approval of BIDA is required for borrowing from abroad in foreign currency (commercial loan, buyer’s and supplier’s credit, etc.) to import capital goods for new project, replacement or expansion of the existing production facilities. • No permission is granted to avail foreign loan to use as working capital .

• The Scrutiny Committee on Foreign Loan/Supplier’s Credit award approval to avail foreign loan. The application for foreign loan has to be submitted to BIDA in the prescribed form with following supporting documents:

• Certificate of Incorporation and Certificate of Commencement from Registrar of Joint Stock Companies & Firms,
• Certified copy of the Memorandum and Articles of Association of the company,
• Copy of Registration Certificate ‘from BIDA,
• Term-sheet, Loan MoU, or Loan Agreement between the lender and borrower, indicating repayment period with detailed schedule, grace period, calculated effective rate of interest,

• Board’s resolution related to the proposed borrowing,

  • Feasibility report of the investment project,
• Financial analysis covering internal rate of return (IRR), break-even point, debt-equity ratio of the project, debt-service coverage ratio, for both base and sensitive cases,
• Relevant equity forms and undertaking from the sponsors/ directors duly filled in for collection of CIB report.
  • Bank certificate on indebtedness or creditworthiness of the borrowing company and its sponsors based on the latest CIB report,
• Certificate from BRTC or BUET which validate the quality, price, and economic life of capital machinery to be imported (in case of supplier’s credit only),
• Encashment certificate, C-Form and Bangladesh Bank report collected from the authorized dealer,
• Utilization of the subject loan with proper banking documents,
• Equity encashment certificate of the project with proper banking documents,
• Credential of the sponsors, and
• Track record of foreign borrowing. ♦ This application of foreign currency loan is currently serviced through BIDA’s online OSS platform (https://bidaquickserv.org/). ♦ Foreign owned (100%) investment projects that are located in EPZ may however obtain foreign currency loans from overseas financial institutions or entities, without prior approval of BIDA or BB. ♦ Applications shall be examined in terms of commercial viability, indebtedness and creditworthiness of the borrower, repayment period, debt-equity ratio, quality/ price/ economic life of procured capital machinery and equipment. ♦ BIDA gives priority mainly to the medium to longer term borrowing. ♦ Applications, after duly scrutinized, shall then be submitted to the Scrutiny Committee headed by the Governor of Bangladesh Bank (BB) for final approval. Following additional documents are needed for the Power Sector:
• Letter of Intent,
• Implementation Agreement, and
• Power Purchase Agreement