Bangladesh and India on Tuesday launched bilateral trade in Indian rupee (INR), along with USD, in a bid to reduce over-dependence on the American greenback.
The Bangladesh Bank (BB) and the Indian High Commission in Dhaka jointly organised a bilateral transaction inauguration event at a city hotel on Tuesday.
At the event, two export letters of credit (LCs) from two businesses —Tamim Agro and Shahjahan Mia – involving ₹28 million, and two import LCs involving ₹12 million by Nita Company and Abdul Matlub Ahmad were handed over by four participating banks – Sonali Bank, Eastern Bank of Bangladesh, State Bank of India and ICICI Bank.
Bangladesh Bank Governor Adbur Rouf Talukder, Senior Commerce Secretary Tapan Kanti Ghosh, and Indian High Commissioner in Dhaka Pranay Verma attended the programme among many others.
After launching the bilateral trade in the Indian rupee, the central bank organised a press conference at its headquarters in this regard.
“We will settle the import payment in rupees that we earned through exports,” Bangladesh Bank Executive Director and spokesperson Md Mezbaul Haque to the media there.
The bilateral trade between the two nations is nearly $16 billion.
Bangladesh’s current trade deficit with India is huge and it is increasing even though the former’s export is increasing. The country’s trade gap with India was $7.7 billion in FY18, which jumped to $11.7 billion in FY22.
Both export and import trade will be settled in INR and the exchange rate of Taka and INR will be fixed by using the cross-currency rate, Haque said.
“Now only INR will be used in the bilateral trade and in the upcoming days local currency taka will be used for the trade. The new era of bilateral trade will reduce transaction costs and charges.”
Before the launching event, the Bangladesh Bank gave permission to three banks – Sonali Bank, Eastern Bank and State Bank of India (SBI) in Bangladesh – to open nostro accounts with their counterparts in the neighbouring country.
The Reserve Bank of India has also granted permission to local banks to open accounts in India to facilitate settlements.
Abdul Matlub Ahmad, President of the India-Bangladesh Chamber of Commerce and Industry, said, “We have been requesting the governments of the two countries for a while to reduce the pressure on USD.
“Once the new system becomes effective, we will be able to trade in rupees and USD. This will save around 4 per cent – 6 per cent cost of business.”
He added that when the transactions with the rupee start in full swing, energy credit in the rupee will be initiated as well. With the credit system, it would be possible for Bangladesh to save about $3 billion – $4 billion a year.
Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association, said, “This move will reduce the exchange rate loss and dependency on USD. I am urging the authorities to take the initiative to start transactions with Taka as well.
At the launching event, Bangladesh Bank Governor Abdur Rouf Taluker said, “Transaction costs during trade with India will be reduced with the introduction of the taka-rupee dual currency cards.
“These cards are almost ready, and they will be launched this September.”
