Real-time forex settlement from 4 Sep

The commercial banks will conduct foreign currency transactions within the country through the Real-Time Gross Settlement (RTGS) system of the central bank from 4 September – a move that will ease the transaction process and minimise costs.

The Bangladesh Bank's Forex Reserve and Treasury Management Department issued a circular in this regard on Sunday.

The foreign currency clearing and settlement process is manual and paper instrument based which requires the physical movement of instruments and officials, resulting in higher transaction costs and inconvenience, according to the central bank.

At present, banks have to deposit Foreign Demand Draft (FDD) to the central bank through an employee to carry out such transactions.

FDD is a channel used by banks to facilitate inter-bank fund transfers using the central bank channel, which requires one working day for settlement.

As of now, the RTGS method was used for local currency (in Taka) transactions within the country. But now, any amount can be transacted in foreign currency through RTGS. 

Banks can charge a maximum of Tk100 including value-added tax (VAT) or equivalent in dollars and euros from customers in each transaction, said the circular.

RTGS system is capable of operating both in local currency and foreign currency. Now Bangladesh Bank is introducing clearing and settlement in five foreign currencies [US Dollar (USD), Great Britain Pound (GBP), Euro (EUR), Canadian Dollar (CAD), Japanese Yen (JPY)]. The clearing and settlement of the Chinese Yuan (CNY) will be incorporated in the RTGS system soon.

Seeking anonymity, a senior official of the concerned department said that with this service, banks will be able to settle transactions quickly in foreign currency as well as domestic currency. 

"The import-export transaction settlement process of banks will be much easier. Business, trade and economic activities will be accelerated due to faster settlement of transactions," he said

At present, more than 11,000 branches of the country's banks are currently transacting in local currency through the RTGS system.

Only the authorised dealer (AD) branch and head office will be able to issue clearing units for foreign currency transactions.

According to the data of Bangladesh Bank, in June of this year, customers settled transactions of Tk 561 thousand 782 crore in domestic currency through the RTGS system, which is 29.15 percent more than the previous month of May. The total transaction in

May was 3 lakh 97 thousand 982 crores. Banks as well as financial institutions are connected to RTGS. At present the institutions are conducting transactions in local currency.