Dhaka, June 16 -- Offshore-banking operations face setbacks following regulatory instructions downsizing the cost-ceiling rate on foreign-currency lending to businesses that dents profitability of commercial banks and may ultimately affect the economy.

As the spread on foreign-currency loans squeezes under the current macroeconomic sluggishness, some of the banks decide to lessen their concentration on offshore-banking operations, with the risk of disruption to trade financing and increase in pressure on the economy, according to the market players.

The Foreign Exchange Policy Department-1 (FEPD-1) of Bangladesh Bank earlier on May 11 issued a circular lowering the all-in-cost ceiling on short-term trade finance to the benchmark rate pl...