Lesson 38 of 42 · Part O · Level 2 · Explained
The ERQ account: how much exporters may keep
How much of their export earnings exporters may keep in foreign currency in an ERQ account: 30% or 15% for goods, a share for deemed exporters within the direct exporter's net FOB value, 50% for software and ICT services, 30% for other services, and 10% of commission for agents.
In Lesson 37, Exporting gold and silver jewellery, Rumi learned how gold and silver jewellery leave Bangladesh, and how much money must come home when the buyer pays for the gold.
Part O turns the question around. Once the export money is home, how much of it may the exporter keep in foreign currency? Back in Lesson 3, How money comes in, we met the ERQ account, the exporter's "dollar pocket", and many lessons since have said "up to the limit in Part O". Today we open Part O at last.
On Monday morning three customers are waiting at Eliana's export desk, and each has heard a different number. Evelyn, the garment exporter from Gazipur, has a new order for woven shirts made from imported fabric. Arman, the spinning-mill owner from Narayanganj, has supplied sewing thread from his mill for Evelyn's order, under an inland back-to-back LC in US dollars. Nabila, who runs a software firm in Dhaka, has just been paid by a client abroad.
"My friend keeps 30%," says Evelyn. "Someone told me software firms keep half," says Nabila. Arman shrugs. "I only sell thread here in Bangladesh. Do I get a pocket at all?"
By luck, the branch is hosting an exporters' meeting that morning, and the guest is Shohag, founder of a garment and textile group and a former leader of an exporters' association. He has filled in more ERQ requests than he can count. "Everyone is a little bit right," he laughs. "The percentage depends on what you export. Let's take it one pocket at a time."
This lesson covers O-1, the first paragraph of Part O: the retention quota limits.
In plain words
O-1 sets how much of their export earnings different exporters may keep in foreign currency. It has five parts.
(1) Merchandise (goods) exporters. They are entitled to a retention quota of:
- 30% of the repatriated FOB value for exports of high domestic value-added goods;
- 15% of the repatriated FOB value for goods with high import content. The circular's examples are apparels using imported woven fabric, POL products (including naphtha, furnace oil and bitumen) and electronic goods, followed by "etc.".
Notice the base: the FOB value that has actually come home, not the invoice value on paper. The circular gives examples of high import content goods, but it doesn't give a test or a list for "high domestic value-added" goods.
(2) Deemed exporters. A retention quota account may also be opened in the name of a deemed exporter who supplies inputs against an inland back-to-back LC denominated in foreign currency. The foreign exchange from one direct export is shared between the direct exporter and the deemed exporter, so ADs must follow two rules very carefully:
- (a) the amount credited to the direct exporter's retention quota account plus the foreign exchange paid to the deemed exporter for the inputs must not exceed the direct exporter's net repatriated FOB export value;
- (b) retention quota accounts may be credited up to the permissible limit, as a percentage of the proceeds realized under inland back-to-back LCs.
The circular doesn't say here which percentage is the "permissible limit" for a deemed exporter.
(3) Software, data entry/processing and other ICT-related services. These exporters may keep 50% of their net export earnings repatriated in foreign exchange, in ERQ accounts.
(4) Other service exporters. Service exporters other than those in (3) may keep 30% of their repatriated export receipts in ERQ accounts, for services rendered in non-physical form.
(5) Agents and trade facilitators. Resident companies or firms working as agents or trade facilitators may keep 10% of their commission earnings received from export proceeds in foreign currency, if:
- they have valid permissions from the competent authorities, if applicable; and
- they are active members of trade associations for the relevant sectors.
One exception. Foreign exchange earned as indenting commission or agency commission that comes from Bangladesh sources cannot be credited to these accounts.
Shohag sums it up: "Think of a tiffin box with compartments. The size of your compartment depends on what you sell: 30 or 15 for goods, 50 for software and ICT, 30 for other services, 10 for agents' commission."
At the desk
Evelyn's woven-shirt shipment, made with imported woven fabric, brings home a net FOB value of USD 100,000 (pretend figures). Eliana explains that apparel using imported woven fabric is the circular's own example of high import content, so Evelyn may keep 15%, or USD 15,000. Arman supplied the sewing thread for the order and was paid USD 4,000 under the inland back-to-back LC in US dollars. Eliana checks rule (a): USD 15,000 plus USD 4,000 is USD 19,000, well within the USD 100,000 net FOB value. Arman may have a retention quota account too, credited up to the permissible limit as a percentage of the USD 4,000 he realized. Then Nabila: her net software export earnings of USD 20,000 let her keep 50%, or USD 10,000, in her ERQ account. Shohag nods. "Three customers, three percentages, one rule book."
Key words
- ERQ
- Exporters' Retention Quota: the share of export earnings an exporter may keep in foreign currency, in an ERQ account.
- FOB
- Free On Board: the seller clears the goods for export and gets them on board the ship at the named port; from then on the risk is the buyer's, and the buyer pays the sea freight.
- Deemed export
- A local supply that counts as export, for example fabric sold to a garment exporter against a back-to-back LC.
- Inland back-to-back LC
- A back-to-back LC in foreign currency opened in favour of a local manufacturer-cum-supplier of inputs, against a master export LC.
- High import content
- Goods whose value comes largely from imported inputs. O-1(1) gives examples: apparels using imported woven fabric, POL products such as naphtha, furnace oil and bitumen, and electronic goods.
- POL
- Petroleum, oil and lubricants.
- Indenting commission
- Commission earned by the local agent (indentor) of a foreign seller for arranging sales. Under O-1, such commission from Bangladesh sources cannot be credited to retention accounts.
Read the rule as written (Para O-1)
(1) Retention quota for merchandise exporters: Merchandise exporters are entitled to foreign exchange retention quota of 30 (Thirty) percent of the repatriated FOB value for exports of high domestic value-added merchandise. However, for merchandise exports of goods having high import content, such as apparels using imported woven fabric, POL products including naphtha, furnace oil and bitumen, electronic goods, etc., the retention quota is 15 (Fifteen) percent of the repatriated FOB value.
(2) Retention quota for deemed exporters: Retention quota account may also be opened and maintained in the names of deemed exporters for supplying inputs against inland back to back LC denominated in foreign currency. Since foreign exchange earned from direct export is to be shared among direct and deemed exporters, ADs are obliged to meticulous compliance with the following:
(a) The total amount credited to the direct exporter's retention quota account together with foreign exchange paid to the deemed exporter against supply of input must not exceed the net repatriated FOB export value of the direct exporter; and
(b) Retention quota accounts can be credited up to the permissible limit in the percentage of proceeds realized under inland back to back LCs.
(3) Retention quota for export of software, data entry/processing, and other ICT-related services: Exporters of software, data entry/processing, and other ICT-related services may retain 50 (Fifty) percent of net export earnings repatriated in foreign exchange in ERQ accounts.
(4) Retention quota for other service exporters: Service exporters other than those mentioned at paragraph 3 above may retain 30 (Thirty) percent of their repatriated export receipts in ERQ accounts against service rendered in non-physical form.
(5) Retention quota for agents/trade facilitators: Resident companies/firms working as agents/trade facilitators may retain 10 (Ten) percent of the commission earning receipts from the export proceed in foreign currency, subject to having valid permissions from competent authorities, if applicable, and are active members of trade associations representing the relevant sectors.
However, foreign exchange earnings on account of indenting commission or agency commission originating from Bangladesh sources cannot be credited to such accounts.
Source: Bangladesh Bank, FEPD-1 Circular No. 26, 30 July 2026, Part O, paragraph 1 (page 53). The original circular is the authority.
Putting it together
So far: merchandise exporters are entitled to keep 30% of the repatriated FOB value for high domestic value-added goods and 15% for goods with high import content, such as apparels using imported woven fabric, POL products and electronic goods. Deemed exporters supplying inputs under inland back-to-back LCs in foreign currency may also have retention quota accounts, but the direct exporter's retention plus the foreign exchange paid to the deemed exporter must not exceed the direct exporter's net repatriated FOB value, and deemed exporters' accounts may be credited up to the permissible limit as a percentage of their inland back-to-back LC proceeds. Software, data entry/processing and other ICT-related service exporters may keep 50% of net export earnings, other service exporters 30% for services in non-physical form, and resident agents and trade facilitators 10% of commission earned from export proceeds, if they hold any permissions needed and are active trade association members, but never indenting or agency commission from Bangladesh sources.
Next: Lesson 39, Using ERQ money: currencies, payments, deposits and cards, shows what exporters may do with the money once it sits in the ERQ account.