Banks transact $770m through RTGS in Sept

Bangladesh’s commercial banks transacted $770 million last month through the Real-Time Gross Settlement (RTGS) system, which the central bank launched on September 4.

For the first time ever in September, banks carried out foreign currency clearing activities through the RTGS system, which opened a new window in the existing payment ecosystem, industry insiders told The Business Post.

RTGS is a credit transfer system mostly used for bank-to-bank transfers, and its foreign currency (FC) operation is similar to that of the local currency (BDT) settlement system.

According to Bangladesh Bank officials, banks and individual clients transacted $770 million as USD and Euro against 20,553 transactions last month, adding that UCBL, Eastern Bank, Exim Bank, Prime bank and Dhaka Bank have the highest positions in terms of transactions.

Before launching the RTGS system for foreign currency transactions, the clearing and settlement process was manual and paper-based. This required the physical movement of instruments and officials, which in turn led to higher transaction costs and inconveniences.

Industry insiders point out that the foreign currency clearing has now become much easier and convenient.

Initially, five foreign currencies — US Dollar (USD), Great Britain Pound (GBP), Euro (EUR), Canadian Dollar (CAD) and Japanese Yen (JPY)— will be cleared through the RTGS system.

The clearing and settlement of the Chinese Yuan (CNY) will be incorporated into the RTGS system soon, senior officials of the central bank said.

To facilitate a safe, secure and efficient interbank payment system, the regulator launched the RTGS system on October 29, 2015, as part of its inclusive digitisation initiative.

The RTGS opened a new horizon in the payment ecosystem, accommodating instant settlement of large value and time-sensitive payments in the country. The system is capable of operating both in local currency and foreign currency.

Before September 4, the RTGS system was operating only in local currency inside Bangladesh.

The system is currently allowed to handle lots of lucrative features, including VAT Online Payment, Customs Duty, E-Payment and Automated Challan System etc.

Along with these individual inter-bank transactions, there is an option to settle all other Deferred Net Settlement Batches such as BACPS, BEFTN or NPSB through the RTGS system, central bank officials say.