New Delhi: Two major banks in Bangladesh, including the largest state-owned lender, are planning to introduce trade transactions denominated in Indian rupees. The move comes as Bangladesh aims to strengthen its declining foreign exchange reserves, Wion reported quoting officials.
Traditionally, trade transactions in Bangladesh have been conducted exclusively in US dollars. However, Reuters reports that state-owned Sonali Bank and Eastern Bank have recently opened “nostro” accounts in rupees with India’s State Bank of India and ICICI Bank, respectively.
The establishment of these nostro accounts will allow the banks to hold funds in rupees abroad and facilitate international trade and foreign exchange transactions, reports Reuters.
The exchange rate mechanism for these transactions will be determined on a cross-currency basis by individual banks, with a formal announcement scheduled for July 11, according to Ali Reza Iftekhar, the managing director of Eastern Bank.
Talking to Reuters, Iftekhar said that by incorporating the Indian Rupee in trade with India, Bangladesh aims to establish a convenient and cost-effective mechanism for cross-border transactions. “The use of the Indian Rupee in India-Bangladesh trade provides a convenient and cost-effective mechanism for conducting cross-border transactions, contributing to the strengthening of economic ties between the two nations,” he was quoted as saying.
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