Welcome to Business Outlook
Related Articles
Global payments messaging network SWIFT has asked Bangladesh’s banks to suspend transactions with seven Russian lenders since they are facing sanctions from the United States and the European Union over Moscow’s invasion of Ukraine.
The Bangladesh Bank yesterday also asked banks to remain cautious in their dealing with their Russian counterparts to avoid punitive measures from the western nations and financial entities in case of violations of any global sanction.
Agrani Bank yesterday received an instruction from SWIFT to suspend all transactions, from March 12, with the seven Russian banks that are facing the sanction, said a top official of the state-run Bangladeshi lender.
The development came after the EU said it was excluding seven Russian banks from the SWIFT (Society for Worldwide Interbank Financial Telecommunication).
The banks are VTB, Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank and VEB. The banks have been given 10 days to wind down their SWIFT operations.
The US has recently announced sanctions on four large Russian banks, including VTB and SberBank.
The sanction prompted VEB to ask its Bangladeshi counterparts, including Agrani Bank and Sonali Bank, to suspend transactions through the SWIFT.
Agrani Bank has ordered its branches not to carry out any transactions with the bank.
Officials of Sonali Bank yesterday informed the BB that VEB had requested it to avoid any transaction for the time being.
Sonali Bank is settling transactions to import equipment for the Rooppur Nuclear Power Plant through a Russian lender.
Bangladesh signed its biggest-ever contract worth $12.65 billion with Russia’s state-run atomic energy company in 2015 to build the plant to generate 2,400 megawatts of electricity.
Md Ataur Rahman Prodhan, managing director of Sonali Bank, did not respond to The Daily Star’s request for comment.
SWIFT is set to disconnect the seven banks from its network on March 12, as required by EU regulations.
This means Bangladesh’s banks would be unable to do business with the Russian lenders either directly or through a third party under the relationship management application (RMA).
The BB held a meeting with the top officials of the commercial banks yesterday.
Md Serajul Islam, spokesperson of the central bank, said that the BB asked local banks to remain alert in settling transactions with Russian lenders.
He, however, did not give any idea about the types of cautionary measures that banks will have to put in place.
Bangladesh has decided to follow an impartial stance about Russia’s ongoing diplomatic tension with the US, the EU, Japan, Australia and some other countries over the invasion of Ukraine.
Under the circumstances, the central bank is observing the situation cautiously, said a number of BB officials.
Local banks have to follow the USA Patriot Act to maintain banking relationships with the US banks, said senior officials of commercial banks.
Under the Act, Bangladeshi banks can’t do banking with the lenders that face an embargo imposed by the US government.
They will face punitive measures if they try to do banking with the sanctioned banks through RMA.
A bank can run banking through a third lender in order to settle foreign exchange business with a foreign nation if they want to avoid direct banking operations. But banks still face punitive measures from the US in such cases, bankers say.
A BB official says that local banks would not be able to do business with the seven Russian banks due to the sanction imposed on the banks’ SWIFT operations.
Bilateral trade between Bangladesh and Russia is worth more than $1 billion, with exports from Bangladesh standing at $665 million in the last fiscal year.
The country mainly exports apparel items, paper yarn, footwear and textile articles and imports cereals, minerals, chemical products, and fertiliser.
A major portion of the bilateral trade is carried out through third parties, said a BB official.
(TDS)
