Bangladesh and India are all prepared to use the rupee in bilateral commercial transactions, signaling a dramatic change away from the historic reliance on the US currency.
The new transaction tool is expected to be launched in the second week of July, according to sources. Both governments are now planning separate festivities in their respective capitals to commemorate the launch. The ceremony is expected to take place on July 11, according to a reliable source within Bangladesh Bank.
However, the dollar-based transaction system will remain in place, alongside the new developments.
For nearly a decade, the two parties have been negotiating currency swap arrangements. The currency swap method refers to conducting cross-border transactions in one’s own currency rather than using the US dollar or another powerful currency.
Sonali Bank and Eastern Bank have recently been granted permission by Bangladesh Bank to open nostro accounts in India’s State Bank of India (SBI) and ICICI Bank in order to facilitate bilateral trade in rupees. A nostro account is a foreign currency account held by a bank at another bank to enable foreign exchange and trade transactions.
The four banks are currently negotiating the creation of the nostro accounts, according to sources.
Ali Reza Iftekhar, managing director of Eastern Bank Limited, said the current focus is on introducing trade in Indian rupees and it will be followed by the issue of using taka in bilateral trade.
The central bank of India – Reserve Bank of India (RBI) – has already permitted Eastern Bank to open nostro accounts, while Sonali Bank is expected to receive the approval within the next few days.