Encashment certificate in Bangladesh: what it is and how to get one

What an encashment certificate is

Only an authorised dealer (AD) can issue one: a bank branch licensed by Bangladesh Bank to deal in foreign exchange. When foreign currency lands in an account there and is converted, the bank can certify the amount, the date, who sent it and the taka value credited.

For investment, Bangladesh Bank's Guidelines for Foreign Exchange Transactions 2018 (GFET) fix the format. Appendix 5/40 is used when the payment is an inward remittance in foreign currency. Appendix 5/39 is used when it is paid from a non-resident taka account kept with a Bangladeshi bank. Under FEID Circular No. 01 of 27 January 2025, both the bank and the company must keep the certificate with the Foreign Exchange Transaction Reporting ID written on it. That ID is generated in Bangladesh Bank's Online Inward Remittance Monitoring System when the bank reports the inflow.

Encashment certificate vs proceeds realisation certificate (PRC)

The two are often mixed up because both are bank certificates about money coming in. They serve different purposes.

IT and other service exporters get a separate bank certificate for IT-related services under the same export circular. None of these export certificates replaces an encashment certificate for a share issue.

When you need it for foreign investment

• Incorporating a company with foreign shareholders. Invest Bangladesh's company set-up steps say to open a temporary bank account, deposit capital in line with each shareholding, and collect the encashment certificate from the bank before filing for incorporation.
• Issuing new shares to a non-resident. GFET Chapter 9 says the foreign currency must be encashed before shares are issued, and the report to Bangladesh Bank within 14 days must include the certificate.
• BIDA registration and amendments. The certificate is on the document list for registering a foreign or joint-venture project and for amending it.
• A resident selling shares to a non-resident. The resident seller needs an encashment certificate for the taka credited, and it goes into the 14-day report on the transfer.

Two exceptions. Companies in export processing zones, economic zones and hi-tech parks do not have to encash foreign equity. Other companies may keep inward equity in a foreign currency account for up to one year. If you plan either, ask your bank in advance how it will evidence the inflow for reporting.

What it should show

The exact layout is set by GFET Appendix 5/40. In practice, check that the certificate lets your bank complete its report to Bangladesh Bank. The January 2025 declaration format asks banks for these details from the SWIFT message and encashment certificate:

• The company's name, as registered with RJSC
• The remitter's name and remitting country
• The foreign currency amount and the date of the remittance
• The taka equivalent credited
• That the purpose is equity investment
• The Foreign Exchange Transaction Reporting ID
• The bank's seal and authorised signature

How to get one

1. Talk to the AD branch firstBefore any money moves, confirm the receiving account, the exact account name and the purpose wording the bank wants. Ask for its document list for an equity inflow.
2. Brief the investorSend written instructions: beneficiary name and account, bank SWIFT code, and a purpose line such as "equity investment in [company name]". The money must come from abroad through the banking channel, ideally from the investor's own account.
3. Confirm the creditWhen the money arrives, the bank reports it and converts it. It may ask you to sign inward remittance forms and show papers that prove the purpose, such as the investment agreement or board resolution.
4. Request the certificate in writingSend a letter on company letterhead with the SWIFT reference, amount and date, asking for an encashment certificate for equity investment.
5. Check it before you use itCompare every field with the SWIFT message, the MoA or Form XV and the investor's details. Corrections are easier now than after filing.

Bangladesh Bank does not publish a turnaround time for issuing the certificate, so ask your branch.

Common problems and how to avoid them

• Wrong or vague purpose. The bank must confirm from documents that the purpose is equity investment. A remittance described as a loan, a service payment or "family support" will not support a share issue without more papers.
• Remitter name mismatch. The report records the remitter's name and country, and the bank checks the source of funds and the shareholder's resident status. Money sent by a parent company, a fund manager or a relative instead of the shareholder needs explaining. Send from the shareholder's own account.
• Exchange rate gaps. Shares are counted in taka, at the rate on the day of conversion. If the rate moves, the taka amount may not cover a round number of shares. Agree in advance how a shortfall or surplus will be handled.
• Missing reporting ID. A certificate without the Foreign Exchange Transaction Reporting ID is not in the required form. Ask the bank to add it.
• Money from inside Bangladesh. Shares to a non-resident can only be issued against foreign currency brought in from abroad. Taka paid locally on the investor's behalf does not count.

Taking foreign investment and want the whole chain handled, from SWIFT to the updated cap table? See FDI transaction support.

Frequently asked questions