The Bangladesh Bank has granted permission to Sonali Bank and Eastern Bank Limited (EBL) to open nostro accounts in rupee with the State Bank of India and ICICI Bank. This move aims to settle a portion of bilateral trade transactions between Bangladesh and India in rupees, instead of relying on the taka-rupee swap that has been under discussion for months. Under the arrangement, income earned in rupee from exports can be deposited into these accounts and used exclusively for importing goods and services from India.
Advance payments for imports can also be made from these accounts with approval from the Bangladesh Bank. Sonali Bank and EBL have already applied to the Reserve Bank of India for opening nostro accounts. The banks hope to be ready for transactions by June, enabling the opening of letters of credit (LCs) under this initiative. This step comes as part of the larger trend of countries seeking alternative currencies to the dollar for international trade. However, caution is advised as Bangladesh’s large trade deficit with India and the limited convertibility of the rupee may pose challenges in executing this arrangement effectively.