Bangladesh Bank Lets Hotels and Shops Keep 15 Percent of Foreign Currency Earnings From Tourists

Bangladesh Bank has opened a new window for hotels, resorts, restaurants, shopping malls and other businesses that serve foreign visitors, letting them keep up to 15 percent of the foreign currency they earn from international card payments instead of converting all of it into taka. The circular, issued on October 25, is aimed at encouraging sales to tourists and giving these businesses easier access to foreign currency for their own legitimate needs.

• Authorised Dealer banks may let eligible merchants keep up to 15 percent of foreign currency receipts from card and other admissible payment instruments, in foreign currency accounts held in the merchants' own names.
• The remaining 85 percent must still be converted into taka, as before.
• Retained funds can be used only for legitimate current-account foreign exchange obligations, including international card payments.
• Hotels, resorts, restaurants, shopping malls and retail outlets that sell to foreign visitors are the businesses named as eligible.

What changes for a hotel or shop owner

Until this circular, a merchant accepting a foreign tourist's card payment typically had no choice but to convert the full amount into taka at the point of settlement. Under the new rule, Authorised Dealer banks can let eligible merchants hold on to a slice of that money in its original currency, in an account in the business's own name, instead of losing the entire sum to conversion. The bank must also make sure the merchant has proper arrangements in place to accept international cards and other admissible payment instruments in the first place, so the facility is tied to upgrading payment acceptance as much as to currency retention.

Why the central bank is doing this now

Bangladesh Bank frames the move as an incentive to sell more to foreign visitors and to give tourism-linked businesses a more practical way to manage their own foreign exchange needs. A business that regularly imports supplies, pays international suppliers or settles card network fees in dollars currently has to go back to a bank and buy foreign currency for each of those needs after converting its tourist earnings into taka. Letting it keep part of the original foreign currency cuts out one round trip of conversion, and the losses that come with each currency conversion along the way.

Industry insiders expect the facility to support businesses that serve foreign visitors and give them easier access to the foreign currency they need for legitimate payments, according to reporting on the central bank's October 25 notification.

The move follows a series of similar steps this year aimed at making it easier for businesses connected to tourism and travel to work in foreign currency, including earlier rules letting tour operators collect payments in taka for packages priced abroad. Each of these changes is narrow on its own, but together they point to a central bank trying to smooth the practical frictions around foreign currency for a sector it wants to grow, even as it keeps tight overall control of the exchange rate and reserves.

What it means for you

If you run a hotel, restaurant, shop or other business that regularly serves foreign visitors and accepts international card payments, ask your bank directly whether you qualify as an eligible merchant under the new circular and what paperwork is needed to open the foreign currency account that holds the retained 15 percent. If you are simply a traveller using an international card in Bangladesh, this circular does not change what you pay. It is a back-end change in how the merchant's bank handles the money after your payment clears, not a new fee or charge at the till. Businesses weighing whether to invest in better card-payment infrastructure to qualify for the facility can use the site's currency converter to estimate how much foreign currency a given share of tourist revenue would actually represent before approaching their bank.