Thursday, 28 September, 2023

Indo-Bangla Trade

New era begins

  • Staff Correspondent
  • 12 July, 2023 12:00 AM
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New era begins

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Tuesday marked a historic moment for Bangladesh and India as they entered into a new era of regional economy with the launch of bilateral trade in Indian Rupee.   

The initiative aims to strengthen the economic ties between the two countries and ease pressure on Bangladesh's foreign currency reserves.

Bangladesh Bank (BB) Governor Abdur Rouf Talukder was present at the inaugural ceremony held at Le Meridian in the city as the chief guest.

Indian High Commissioner, Pranay Verma, was present as a special guest.

Addressing the function, the BB Governor said this financial milestone is anticipated to alleviate the stress on Bangladesh’s foreign currency reserve, with an expected savings of approximately $2 billion.

"Introducing Rupee in bilateral trading has been under discussion for a long time. India is one of Bangladesh's largest trading partners," Talukder remarked.

He also hinted at an upcoming dual currency card slated to launch in September, which is expected to boost transactions between the Taka and the Rupee.

The Reserve Bank of India (RBI) has initially permitted Sonali Bank and Eastern Bank to open corresponding Rupee accounts. These accounts will integrate with the SWIFT (Society for Worldwide Interbank Financial Telecommunication) payment network in the USA, thereby facilitating the new trade transactions.

In his address, High Commissioner Pranay Verma underscored the importance of the new settlement mechanism to the business community of Bangladesh. He projected that it would promote bilateral economic ties, reduce transaction costs and times, and encourage Bangladesh exports to India.

"Currently, Bangladesh is India's largest trade partner in South Asia, with our trade volume having doubled in the past five years. As Bangladesh is on the brink of its economic transition to a developing country by 2026, India is eager to seize this opportunity by amplifying comprehensive economic cooperation,” he noted.

Following the launch, former Bangladesh Bank governor Dr. Atiur Rahman highlighted the arrangement's potential for enhancing bilateral trade. He noted that Bangladesh has been actively exploring new markets, with India, Japan, and Australia identified as priority destinations.

To mitigate potential challenges in the new arrangement, an Indo-Bangla economic commission sub-group for banking has been established, Dr. Atiur noted.

FBCCI President, Jashim Uddin, echoed the optimism, anticipating that the arrangement will enhance bilateral trade. He announced plans for three trade fairs in India to promote Bangladeshi exports.

During the event, Amit Kumar, Country Manager of the State Bank of India, illustrated the process of corresponding banking using a special Rupee vostro account. For Bangladesh, trade will take place between Sonali Bank, Eastern Bank, and the State Bank of India. In India, the State Bank of India and ICICI will handle the transactions via the American SWIFT platform.

Bangladesh currently exports goods and services worth $2 billion annually to India, while importing $14 billion worth of goods and services from the neighboring country.

The landmark event was attended by several key figures including Tapan Kanti Ghosh, Senior Secretary of the Commerce Ministry; Lokman Hossain Miah, Executive Chairman of Bangladesh Investment Development Authority; Sheikh Mohammad Salim Ullah, Secretary of Financial Institutions Division; Abdul Matlub Ahmad, President of India-Bangladesh Chamber of Commerce & Industry; Faruque Hassan, President of BGMEA; and Sameer Sattar, President of DCCI.