The central bank will be able to seek information on immovable or any assets owned by Bangladeshis abroad under the proposed changes to the Foreign Exchange Regulation Act.

The proposed amendment is likely to be placed at a cabinet meeting today.

The move to update the seven-decade-old law comes after the International Monetary Fund tagged it as a condition for the Extended Credit Facility loan to improve the trade and investment climate.

As per the existing law, the central bank can only ask for information from Bangladeshi citizens about their holdings of foreign currency and foreign securities.

Of late, many Bangladeshis have siphoned off money abroad and bought properties with the sums. And under the existing laws, neither the Bangladesh Bank nor the government can seek information about their assets abroad, and they are also not bound to provide it.

The proposed amendment will enable the government and the central bank to seek such information. If they do not provide it, punitive action can be taken against them, as per the proposed law. 

At the same time, the amendment, once passed, will give power to the central bank to seek information related to foreign currency from foreign nationals living in the country.

Meanwhile, the proposed amendment also contains other modifications to the existing law with a view to making foreign trade and investment easier.

Suggestions have been placed to make it easier to set up branches, representative and liaison offices of foreign companies.

At present, permissions are required from both the Board of Investment and BB to establish such offices.

As per the amendment, only permission from the BoI will suffice but the central bank has to be informed about it. 

A high official of BB said the amendment would lend a helping hand in attracting foreign investment.

Despite foreign currency reserves crossing the $22-billion mark, no provision is being included for making capital account transaction convertible.

At the start of the ECF programme, the IMF put pressure on the government to make the capital account transaction convertible but the government has since rejected the proposal.

But IMF too is now convinced that Bangladesh's economy is still not ready for making the capital account transaction convertible, a senior official of the finance ministry said.

Capital account convertibility would basically allow local currency be exchanged for foreign currency without any restriction on the amount.

Bangladesh's existing foreign exchange regulation act is almost a copycat version of the laws passed in undivided India in 1947 during the British rule.

In 1976 and 2003, some minor amendments to the act were introduced. Besides, the current account transaction convertibility was made in 1994, and the exchange rate was made market-based in 2003.

In case of foreign trade the service sector's share has increased, but the existing law does not have much about it.

A number of amendments have been proposed in the act to make foreign currency earning easier through service sector.

Besides, a number of amendments have been suggested to the existing convertibility of the current account transaction through which the central bank may impose various rules and regulations. 

Through these provisions, BB will have the authority to take measures to stop over- and under-invoicing.