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With the launch of Bangladesh Bank’s new platform for foreign exchange transactions– the real-time gross settlement (RTGS) system, not only does it help reduce cost and time but also enables businessmen’s credit is no longer be stuck in banks.
Banks now clear and settle five currencies which are the dollar, pound sterling, euro, Canadian dollar and the Japanese yen through this platform which takes a few seconds by charging a minimum amount.
Bangladesh deals with $300 million worth of foreign demand drafts of businesses on average every day.
Earlier, these foreign currencies were settled in the traditional “paper-pen” transaction system.
If the foreign demand drafts unexpectedly got lost, banks had to lodge cases with the police and cause suppliers trouble while receiving their funds.
Bankers and businessmen say that the new digital platform would help settle the export and import of Bangladeshi entities efficiently as funds owned by businesses are no longer getting stuck in banks.
According to a businessman, around $400 million used to be stuck on average every day in the channels under the manual method with either the central bank or the commercial banks.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that the Bangladesh Bank initiative would help make it easier to do business.
“Because of RTGS we will not face such difficulties thanks to the central bank’s move. As a result, businesses can use their money in an efficient way,” he added.
The business leader also thinks currencies will roll in more the days ahead based on the new infrastructure, putting a positive impact on the economy as a whole.
Regarding RTGS Bangladesh Bank Governor Abdur Rouf Talukder said: “A new horizon of foreign exchange transactions within the country has been opened up through the implementation of automated foreign exchange clearing in the RTGS system.”
He also added that all banks and business organizations will play an active role in the implementation of Vision 2041 by creating a cashless society through continuous modernization.
However, on August 28, the central bank issued a policy in this regard which came into effect on September 4.
It is said that a foreign currency account should be opened for the settlement of transactions in this manner. From here only transactions can be settled dollar-to-dollar, euro-to-euro.
There are no restrictions on the settlement of transactions of any amount.
According to the central bank data, clients settled 51 transactions involving a combined value of $1.13 million using the system when it kicked off on September 4.
Both the number of transactions and amount swelled to 838 and $42.23 million respectively on September 12.
According to Bangladesh Bank guidelines, banks can charge a maximum of Tk100 in a transaction which was $5 to $20 earlier.
Banks have to follow the Guidelines for Foreign Exchange Transactions (GEFT) in the settlement of transactions. After sending money from one bank to another, the beneficiary should pay within a maximum of two hours.
The interbank liquidity facilities cannot be availed in foreign currency.
It takes a maximum of 30 seconds to settle any amount from RTGS, which was first introduced in the country in 2015.
Most of the 11,000 branches of commercial banks are connected to this system.
As against 6,23,000 transactions, Tk4,35,000 crores were settled in July.
Not only banks on the RTGS platform, but 15 financial institutions have also been added since last June.
On August 28, the central bank issued a circular and sent it to all CEOs and MDs of the banks, which was implemented on September 4.
It is said that a foreign currency account should be opened for the settlement of these types of transactions.
From here only dollar-to-dollar, and euro-to-euro transactions can be settled but there are no restrictions on the settlement and amount of transactions.
(DT)
