Bangladesh Bank yesterday eased the rules for service sector industries that are owned or controlled by foreign entities to avail short-term working capital loans from their parent companies or shareholders.

Previously, only manufacturing companies were allowed to enjoy the facility but the new rule has widened the scope to a large extent, according to a central bank notice.

The companies concerned can avail short-term loans from their parent companies or shareholders abroad for up to 6 years after beginning their service output activities, as per the revised rules.

This means the central bank has extended the timeframe by three years from the previous eligible period of 3 years.

The maximum interest rate is set at 3 per cent and since it will be received as foreign currency, the loans will be disbursed after being converted into taka.

The foreign companies earlier paid interest given the rate of 3-month fixed deposit schemes (FDRs) of local banks.

Repayment of the loan is remittable after the principal and interest amounts are converted into dollar.

Bangladesh Bank has been continuously updating its regulations to facilitate business, including foreign investment, a central bank official said.  The new rules will help foreign owned and controlled companies to get short term external loans to a wider extent, he added.