Published: 11:42 PM, 24 September 2026
Modernizing Foreign Exchange Regulations for Freelancers and Service Exporters
On 22 July 2026, Bangladesh Bank issued a landmark circular aimed at streamlining and strengthening the regulatory framework governing foreign exchange transactions by freelancers and individual service exporters. This initiative reflects the central bank’s recognition of the rapidly expanding digital economy and the growing contribution of freelancers - particularly in ICT, business process outsourcing (BPO), and online professional services - to Bangladesh’s export earnings. Rather than introducing an entirely new regime, the circular consolidates and restates existing provisions under the Foreign Exchange Regulation Act, 1947 and related circulars into a single, coherent framework, thereby improving clarity, consistency, and compliance in an area that has long been characterized by fragmented guidance.
A key feature of the circular is its explicit departure from traditional export procedures designed for physical goods. Historically, export regulations in Bangladesh have relied on documentation such as EXP Forms, shipping bills, and customs declarations. These requirements are not suited to digital service exports, where delivery occurs electronically and often instantaneously. Recognizing this fundamental difference, the circular clarifies that procedures applicable to physical goods, including submission of EXP Forms, will not apply to services exported through the internet or other electronic media. At the same time, it maintains the essential regulatory principles of realization, repatriation, and reporting of export proceeds, ensuring that foreign exchange earnings are properly channeled through the formal financial system.
The circular adopts a pragmatic approach to the way freelancers receive payments. In the digital economy, transactions are often supported not by traditional documents but by electronic evidence such as emails, contracts, platform-generated statements, and digital invoices. Bangladesh Bank has acknowledged this reality by allowing such evidence to serve as the basis for processing payments. Authorized dealers banks are entrusted with verifying these electronic records and, upon satisfaction, crediting the equivalent amount in local currency to the freelancer’s account. At the same time, freelancers are allowed to retain a portion of their earnings in foreign currency through Exporters’ Retention Quota (ERQ) accounts, thereby providing flexibility for international transactions and expenses.
In the absence of conventional documentation, the responsibility of banks becomes more nuanced and critical. The circular emphasizes that authorized dealer banks shall exercise due diligence in assessing the genuineness of transactions. This includes reviewing digital records alongside inward remittance messages and ensuring that the freelancer’s professional profile is consistent with the services being exported. Such measures are designed to prevent misuse of the system while avoiding unnecessary barriers for legitimate service exporters. To further ease compliance, the circular introduces a threshold under which inward remittances up to USD 20,000 may be credited without the submission of Form-C. For amounts exceeding this limit, an online Form-C (ICT) needs to be submitted through secure digital platforms, thereby balancing facilitation with regulatory oversight.
Another important dimension of the circular is its recognition of the role played by international Online Payment Gateway Service Providers (OPGSPs). These platforms have become an integral part of the global freelance ecosystem, enabling small-value cross-border transactions with ease and efficiency. Bangladesh Bank permits authorized dealer banks to facilitate repatriation of export proceeds through such platforms, subject to a per-transaction limit of USD 10,000. To ensure transparency and control, banks are required to maintain separate nostro collection accounts for each OPGSP, and funds should be automatically transferred from notional accounts to these accounts. Crucially, the circular reiterates that no foreign exchange earnings may be retained abroad in notional accounts, reinforcing the principle that export proceeds will ultimately be repatriated to Bangladesh.
The circular also embraces the growing convergence between traditional banking and digital financial services. It allows authorized dealer banks to issue dual-currency freelancer cards, enabling individuals to receive export proceeds directly and use them internationally. In addition, Mobile Financial Service Providers (MFSPs) and Payment Service Providers (PSPs), in collaboration with foreign counterparts, are permitted to facilitate the repatriation and settlement of service export proceeds. Funds can be credited to digital wallets or bank accounts in accordance with underlying settlement mechanisms. This integration enhances accessibility and financial inclusion, particularly for freelancers operating outside major urban centers, and reflects a broader policy shift toward supporting fintech-driven solutions.
A notable incentive embedded in the circular is the provision relating to Exporters’ Retention Quota accounts. Freelancers engaged in software development, data processing, and other ICT-related services may retain up to 50 per cent of their net export earnings in foreign currency, while those engaged in other services may retain up to 30 per cent. The remaining portion shall be converted into Taka and credited to local currency accounts. The retained foreign currency can be used for a range of legitimate current expenses, including foreign travel, software registration, domain and hosting fees, server maintenance, and import of equipment. This facility not only reduces transaction costs associated with repeated currency conversions but also enhances the operational efficiency of freelancers participating in global markets.
Despite its facilitative orientation, the circular maintains a strong emphasis on compliance and financial integrity. Authorized dealer banks are required to ensure that applicable taxes are deducted and paid, and that all transactions comply with KYC and AML/CFT standards. These requirements are particularly important in the context of digital and cross-border transactions, where the risk of misuse can be higher. By placing responsibility on banks to verify transactions and maintain proper records, the circular seeks to uphold the integrity of the financial system while enabling legitimate economic activity.
The issue of timely repatriation is addressed with equal importance. Export proceeds from services need to be brought back into Bangladesh within the same frame applicable to exports of goods, ensuring consistency across different types of exports. At the same time, the circular takes a firm stance against the retention of export earnings abroad. It clearly states that holding such proceeds in foreign accounts, assets, or virtual assets - outside approved arrangements - constitutes a violation of the Foreign Exchange Regulation Act, 1947. This provision is aimed at safeguarding national foreign exchange reserves and preventing capital flight through informal or unregulated channels.
Finally, the circular underscores the importance of reporting and documentation. Authorized dealer banks shall report all transactions to Bangladesh Bank using appropriate purpose codes and maintain proper records for audit and supervisory purposes. This ensures that the central bank retains visibility over the volume and nature of service export transactions, which is essential for effective policy formulation and macroeconomic management.
Taken together, the circular represents a significant step forward in aligning Bangladesh’s foreign exchange regulatory framework with the realities of a digital, service-oriented economy. It removes outdated procedural barriers, recognizes modern modes of transaction, and provides practical guidance to both freelancers and financial institutions. At the same time, it reinforces core regulatory principles relating to repatriation, transparency, and compliance. As Bangladesh continues to expand its footprint in the global digital marketplace, such initiatives will play a crucial role in fostering growth, enhancing competitiveness, and ensuring that the benefits of service exports are fully realized within the formal economy.
Mehdi Rahman writes on
foreign trade and
monetary policies.
