Banks in Bangladesh no longer need regulatory approval to issue payment commitments against the surplus earnings of foreign airlines and shipping companies in the country.

Previously, the Bangladesh Bank's approval was required to issue payment commitments, which act as a pledge by the bank that payable funds will be disbursed at a later date.

Now though, banks can make such commitments for the repatriation of surplus earnings in the accounts of local agents of foreign airlines and shipping companies.

However, banks still need to meet certain conditions imposed by the central bank in order to issue their payment commitments.

The Bangladesh Bank yesterday issued a notice in this regard, saying that banks will have to ensure that all applicable credit norms and prudential parameters, including the single borrower exposure limit, are followed as prescribed.

Also, the applications for payment commitments have to be supported by documentary evidence showing that necessary arrangements were made to cover the amount due using collateral acceptable by the bank.

Additionally, payment commitments need to be approved by the board of directors of local banks while the same will be required from the management of foreign banks in the country.