An offshore bank is a bank regulated under an international banking license, which usually prohibits the bank from establishing any business activities in the jurisdiction of establishment. Due to less regulation and transparency, accounts with offshore banks were often used to hide undeclared income.
It describes a relationship that a company or individual has with a financial institution outside the country of their residence. This requires opening a bank account, making deposits, withdrawals and transfers from that account to the exact same way you would with a bank account at home.
In context of our country, Offshore Banking Unit mainly deals with non-residents Bangladeshi citizens, maintaining exclusively foreign currency transactions, can borrow and lend in Foreign Currency with any other local and global Banks, being treated its operation as a country within a country, commissioned by a separate Banking License from Bangladesh Bank and free from minimum reserve requirement.
It may be further defined as the prioritized banking operation when there is no permission for resident Bangladeshi citizen and on contrary dealing with the non-residents 100% foreign-owned and joint-venture investment enterprises inside the export processing zones which does not fall under the set regulations of Bangladesh Bank and other regulators.
Basically, it is completely a separate functions and
distinct identity, where its customers can enjoy unique package of tax benefit
and operations which are free from local regulations to compete with domestic
banks including local branches of foreign bank.