Endorse strategies to mitigate market risks

Najith Meewanage
CEO
Commercial Bank of Ceylon Bangladesh

Since 2004, Offshore Banking has been central to Commercial Bank of Ceylon (CBC) in Bangladesh, following its acquisition of Credit Agricole Indosuez Bank. As a foreign bank with over 100 years of legacy, CBC has consistently maintained a robust FCY deposit base, contributing around 25% to the bank's balance sheet. This strong FCY deposit foundation has enabled us to establish a diverse range of cross-border credit limits, ensuring liquidity and supporting international trade financing for our clients. Through prudent management, the Offshore Banking Unit (OBU) has played a pivotal role in CBC's operations, allowing us to meet the evolving needs of our customers while capitalizing on global opportunities.

CBC Bangladesh offers unique features to attract offshore investors. Our diverse products include foreign currency accounts, fixed deposits, and tailored investment options with competitive interest rates. We provide a wide range of Letters of Credit (LCs) for import and export clients, along with export bill discounting, export bill purchases, and import-funded facilities for up to 360 days, extendable by another 180 days. Our dedicated OBU team, relationship managers, and global investment opportunities ensure optimal returns and personalized service for medium and large clients. CBC serves OBU clients through a 24/7 call center, providing precise assistance whenever needed.

Currently, forty Bangladeshi banks offer OBU facilities, with recent changes allowing residents to open accounts. Well-rated and widely accepted foreign banks like CBC play a crucial role in enhancing foreign currency reserves, fostering a dynamic market, improving trade finance, and strengthening foreign exchange management.

Expatriate Bangladeshis often face trust issues with offshore banking due to political instability, complex regulations, low credit ratings, limited investment options, and low financial literacy. To address these concerns, simplifying regulatory guidelines, introducing diverse short-term products, and improving financial literacy programs are essential. Enhancing the country's credit ratings and political stability, along with clear communication and improved digital access, will boost investor confidence and engagement in the financial sector.

For offshore banking to thrive, we seek a flexible regulatory framework from the central bank that encourages investor participation while ensuring effective supervision. Additionally, Bangladesh Bank should promote hedging instruments to protect against liquidity and interest rate risks, ensuring stability in a volatile market. The market should also be diversified with a broader range of OBU products tailored to meet various investor needs, including innovative financial solutions. Bangladesh Bank should prioritize long-term facilities in future circulars to enhance offshore banking's role in the financial sector's growth and ensure economic stability.