When it comes to investments, bonds offer some of the best-secured opportunities out there. As a part of investment facilities through bonds for non-resident Bangladeshis (NRBs), Bangladesh Bank offers US Dollar investment bonds (USDIB). Let's take a detailed look at who this is for, how to apply, and what are the benefits of the bond. 

What is a US Dollar Investment Bond? 

The US Dollar Investment Bond was first introduced in 2002 as a form of investment opportunity for the NRBs. The key goal was to maintain economic stability and increase foreign reserves by attracting dollar investments. It also provided a secure pathway for the NRBs to invest and gain from their foreign earnings.

The rules for the USDIB were later updated in 2012 where the invested principal and the interest can be repatriated in dollar or taka as per the choice of the investor. 

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Who is Eligible for USDIB? 

The government of Bangladesh outlined the eligibility criteria for USDIB investment as follows: 

Any NRB living and working abroad earning in foreign currency.
Foreign nationals of Bangladeshi origin living abroad and earning in foreign currency. 
Government and semi-government employees working abroad and earning in foreign currency. This includes those working in Bangladeshi missions or international organizations.

How to Buy USDIB? 

The process of buying USDIB starts with opening a foreign currency account in any designated bank that operates USDIB under Bangladesh Bank. Note that the F.C. account is different from the Non-Resident Investor’s Taka Account (NITA) as the investment currency can only be US dollars in this case. 

Step 1: Opening a Foreign Currency Account 

Almost all the leading commercial banks (both national and private) offer USDIB under their NRB banking services. To open a foreign currency account, an NRB would require the following documents. 

- Prescribed Account Opening Form 
- Two passport-size photographs of each of the account holder and the nominee 
- Authorized specimen signature card (attested by the Bangladesh Embassy in the residing country) 
- Proof of employment 
- Copy of passport (attested by the Bangladesh Embassy in the residing country) 

An NRB can easily open the F.C. account in any foreign branch of the available banks or use the mail-in service to open the account in Bangladesh. 

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Step 2: Document Required for USDIB 

The process of applying for USDIB differs from bank to bank. Generally, the following documents are required. 

- Bangladesh Bank application form for USDIB (https://fid.portal.gov.bd/sites/default/files/files/fid.portal.gov.bd/forms/4085d5c1_fd59_4be6_921d_c2c491fce6dc/investment.pdf)
- Application request to invest in USDIB in the respective bank 
- Personal declaration form 
- FATCA form (for NRBs residing in the USA) 

Step 3: Applying for USDIB 

Once you apply for USDIB, you will need to show equivalent funds in your foreign currency account associated with the bank. The money can be deposited in the F.C. account in one of the following ways: 

- Cash foreign currency deposited at an NRB branch of the bank
- Traveler cheques 
- Regular cheques or drafts 
- Money order receipt 
- Electronic fund transfer 
- Once the bank completes the due diligence, it will issue bond scrips against the desired amount of bonds to be purchased. 

Read more: How to Buy Bangladesh Government Treasury Bond: Everything You Need to Know

How to Calculate Returns on USDIB? 

Recently, the government hiked the interest rate on USDIB to make it more lucrative compared to other investment opportunities abroad. The current interest rate on USDIB is as follows. 

For example, if you invest 100,000 USD in USDIB, you will receive 5,500 USD interest if you encash at the end of the first year. For the second-year encashment, the interest will be 12,000 USD. And if you encash at maturity, you will receive 19,500 USD. 

The interest on USDIB is paid semi-annually just like other government bonds. 

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Features and Benefits of USDIB 

Maturity Period

The US Dollar Investment Bond has a maximum three-year maturity period. Compared to other bond investments, the maximum maturity period is much lower which is a great opportunity for short-term NRB investors. 

Security and Stability 

The USDIB is backed by the government of Bangladesh through the Bangladesh Bank. As a result, it offers better security and stability compared to any other investment opportunities. The principal and the interest rate are secured against drastic economic changes as the investment currency is in US Dollars. 

Tax Benefits 

Another key feature of the USDIB is that the principal and the interest gained after maturity are exempt from taxes. This tax exemption increases the effective return on investment, making the bonds more lucrative compared to other taxable investment options. 

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Death-Risk Benefit

There is a death risk-benefit on the US Dollar Investment Bond. The current death-risk benefit is as follows. 

The minimum investment threshold for death risk-benefit is 10,000 USD. Additionally, the benefit cannot exceed 20,00,000 BDT. 

Repatriation Flexibility 

An NRB investor can easily repatriate the principal and interest gained in the investing currency to their residence country. Alternatively, they can convert it into Taka and seek other investment opportunities. USDIB also offers reinvestment opportunities upon maturity.

No Upper Limit on Investment 

The minimum investment amount is set at 500 USD. An NRB can invest any multiple of 500 in the USDIB with no upper limit of investment. The absence of an investment limit helps to attract more investment as investors look for substantial gains. 

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Encouraging Official Remittance 

Investing in USDIB allows for remittance inflow through official channels. This not only helps in better tracking and utilization of foreign currency inflows but also supports Bangladesh's foreign exchange reserves, contributing to the country's economic stability. 

Ease of Investment 

The investment process in USDIB is pretty straightforward. Any NRB can purchase USDIB through any authorized dealers, Bangladeshi banks, and branches of Bangladeshi banks abroad. This accessibility encourages more participation from the diaspora community. 

Additionally, an investment of 1 million USD will grant CIP status to the investor in Bangladesh. 

Final Words 

The US Dollar Investment Bond is an excellent secured investment opportunity for NRBs. The recently hiked interest rate renewed the perception of USDIB and its returns. In addition to gains, the USDIB offers a secure way to contribute to the overall development of Bangladesh by bringing in remittances. 

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