In a pioneering step, two Bangladeshi banks are aiming to change trade operations by using Indian rupees as a referred to currency. With a goal to enhance FX assets and lessen dependency on the dollar, Eastern Bank and Sonali Bank are driving this strategic move.
On July 11, Eastern Bank, which has created rupee assets with the State Bank of India and ICICI Bank, will publicly disclose its proposal for rupee-based trading. Following suit, state-run Sonali Bank will also provide an equivalent service, demonstrating the willingness to embrace indigenous and regional coins in an effort to conserve foreign currency reserves during times of crisis.
As stated by Ali Reza Iftekhar, Managing Director of Eastern Bank, the usage of the Indian rupee in India-Bangladesh commerce would expedite cross-border operations, enabling a more cost-effective and easy procedure. By cutting conversion charges and the total cost of conducting business, these efforts are set to transform the bilateral commerce scene.
Bangladesh’s dependence on India for goods is clear, with nearly $14 billion worth of commodities coming in from India in the past fiscal year, making it the country’s second biggest supplier behind China. In comparison, exports from Bangladesh to India amounted to barely $2 billion over the same time. The implementation of rupee-based financing is anticipated to facilitate and deepen this trading relationship.
Eastern Bank’s Managing Director, Ali Reza Iftekhar, voiced cautious optimism on the beginning phases of this change. While he does not foresee an instant spike in commerce to reach $15 billion, he thinks that the decreased exchange loss and speedier transaction conditions will drive entrepreneurs to embrace this unique technique.