Bangladesh Bank (BB) has introduced a framework to facilitate the settlement of cross-border trade transactions in Taka through Non-Resident Taka (vostro) accounts maintained by authorised dealer (AD) banks in trading partner countries.
Under the existing arrangement, ADs-- lenders permitted to buy, sell and manage foreign currencies -- could open Taka vostro accounts in the names of their overseas branches and correspondent banks against inward remittances in freely convertible currencies.
The new arrangement allows banks to open and maintain Taka vostro accounts in the names of correspondent banks in Bangladesh’s trading partner nations without initial deposits, against payments to be received for admissible imports.
The balances maintained in such accounts will be used for the settlement of export payments from Bangladesh and other permitted transactions.
Under the arrangement, letters of credit, contracts and invoices will continue to be denominated in freely convertible or admissible currencies. The invoiced amounts will be converted into Taka using the prevailing exchange rate for settlement through the vostro accounts.
For import transactions, credits to Taka vostro accounts may arise from payments made by importers. For export transactions, payments may be made from Taka vostro accounts to exporters.
BB also permits advance payments for eligible imports and exports through such arrangements in accordance with prevailing foreign exchange regulations. Exporters receiving proceeds in Taka may continue to avail themselves of foreign currency retention facilities, where eligible, for meeting obligations such as import payments for inputs and repayment of loans taken from the Export Development Fund.
BB said surplus balances in Taka vostro accounts may be utilised for permitted purposes, including investment in Bangladesh through foreign direct investment, foreign portfolio investment, alternative investment funds and open-end mutual funds under prevailing regulations. Such balances may also be used for lending to resident entities with necessary approvals or outward remittances.
The new framework provides an additional channel for bilateral trade settlement in Taka while maintaining existing documentation, reporting and compliance requirements.
Sun News/ rabbi
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