Two more banks approved to trade in rupee

Business Desk :
Standard Chartered Bangladesh (SCB) and Islami Bank Bangladesh PLC received approval from Bangladesh Bank for bilateral trade with India using the rupee.

Up until now, Sonali Bank PLC, Eastern Bank PLC and the State Bank of India were doing the same under a cross-border trade settlement mechanism rolled out by Bangladesh and India on July 11 earlier this year.

Under the mechanism, to reduce dependency on the US dollar for transactions, Indian exports and imports can be invoiced, paid for and settled in the rupee.

This is being done through the lenders’ nostro accounts — bank accounts held in another country by domestic banks — denominated in the currency of the overseas country.

Bangladeshi exporters are receiving their proceeds in rupee in those accounts and that balance is being used to pay for the imports from India.

In short, import bills equivalent to the export proceeds can be settled under the mechanism.

The exchange rate used would be market-determined.

Tamim Agro Industries was the first company in Bangladesh to open a letter of credit for exports worth Rs16 million.