Yuan comes under automated clearing system 4 Feb

Staff Reporter :
Like most established foreign currencies, Chinese yuan is now here in Bangladesh’s fastest settlement system styled RTGS in expectation of easing pain of the businesses in trade payment, traditionally dominated by costly dollar.

The Chinese currency will come into trade settlement on RTGS from February 4, according to a recent Bangladesh Bank circular.

Real Time Gross Settlement or RTGS is an online means of immediate transaction settlement from one bank to another.

Through RTGS a transaction takes just 30 seconds for pressing digits to get on the information superhighway.

The central bank launched the real-time gross settlement (BD-RTGS) system in 2015 to facilitate a safe, secured and efficient interbank payment system. Initially, the system was operated only in the local currency.

In September 2022, inland foreign currency transaction among banks was inaugurated, giving permission to carry out automated clearing in five currencies — US dollar, pound sterling, euro, Japanese yen and Canadian dollar.Now, the yuan was added to the list of the currencies.

The RTGS is an independent trading platform. A foreign-currency account should be opened for settlement of transactions in this manner. However, there is no restriction on the settlement of transactions of any amount.

The bank can charge a maximum of Tk 100 per transaction through the RTGS system. Most of the 11,000 branches of commercial banks are connected to this system.

According to the latest data of the central bank, Tk 4.73 trillion was settled against 832309 transactions in November last.

At the same time, against 60,000 transactions, $1.97 billion worth of foreign-currency settlement was done. A local bank can open letter of credit or LC in RMB as it is one of the currencies in the IMF basket.

Meanwhile, World’s second-largest economy, China is the biggest trade partner of Bangladesh. The bilateral trade between Bangladesh and China crossed $20.0 billion in the financial year 2021-22 from $3.3 billion in FY10.

China is more imported destination of Bangladesh, however, accounted for 1.22 percent of Bangladesh’s total exports in FY23.