Bangladesh, India trade transactions in rupees will ease pressure on forex reserves: High Commissioner

Indian High Commissioner to Bangladesh Pranay Verma on Tuesday said the new arrangement — through initially designating selected Indian and Bangladeshi banks — to commence settlement of bilateral trade in Indian rupee can help reduce pressure on foreign exchange reserves.

“There are clear benefits of this new mechanism. It will reduce pressure to some extent on foreign exchange reserves for settlement of trade, while allowing some savings on exchange costs for traders. Essentially, this mechanism would help in bringing certainties of dealing in our own currencies,” he said.

Speaking at an event to mark commencement of Bangladesh-India bilateral trade in Indian rupees, the high commissioner said the Indian banks currently identified are the State Bank of India and the ICICI Bank, whereas the designated Bangladeshi banks are Sonali Bank and Eastern Bank Ltd.

Bilateral trade settlement in rupee entails each of the designated Bangladeshi banks opening a Special Rupee Vostro Account (SRVA) with the designated Indian banks.

With growing determination and willingness, both sides, despite the odds presented by the global economic situation, have moved forward to add new momentum to the economic ties, said the envoy.

“We faced the challenge presented by the Covid pandemic, and emerged stronger from it. The current global headwinds that are affecting economies across the world, present yet another challenge. And it is very heartening, and a symbol of the resilience of our bilateral partnership, that we are yet again adapting and leveraging opportunities to take our relationship and our economies forward through this innovative arrangement,” he said.

This is also a reflection of the commitment to shared growth and shared prosperity, said the high commissioner.

He said the success of this mechanism will lie in widespread knowledge and use of this arrangement.

Bangladesh Bank Governor Abdur Rouf Talukder, Senior Secretary to the Ministry of Commerce, Executive Chairman of Bangladesh Investment Development Authority (BIDA), Secretary to Financial Institutions Division, Ministry of Finance, and presidents of the trade and chamber bodies were present.

“It gives me great pleasure to welcome you all here today at this landmark event, where we formally announce the commencement of the India-Bangladesh trade in Indian rupee,” said the Indian envoy.

He said India-Bangladesh relations have transformed significantly over the last decade under the visionary leadership of Indian Prime Minister Narendra Modi and Bangladeshi Prime Minister Sheikh Hasina.

“And one of the most important manifestations of that transformation is our visibly growing economic and commercial ties and connectivity links,” he said.

Bangladesh is India’s biggest trade partner in South Asia, and fifth largest globally. In the last five years, bilateral trade has more than doubled.

Bangladesh’s exports to India have consistently crossed the one billion dollar mark consecutively over the last three years. In the last financial year, it crossed two billion dollars for the first time.

India, with its diverse market, has emerged as the top export destination for Bangladesh in Asia.