Staff Reporter :
Bangladesh Bank (BB) has recently issued circular urging banks to facilitate the settlement of import and export transactions through counter-trade arrangements.
This move comes as part of the central bank’s adoption of a new policy aimed at enhancing the efficiency of export-import operations through the counter-trade system.
In its circular, BB has encouraged Bangladeshi parties, including exporters, importers, and traders, to voluntarily engage in counter-trade arrangements with their counterparts abroad for the settlement of import payments into Bangladesh.
This involves utilizing the proceeds from goods exported from Bangladesh to settle import payments, thereby reducing reliance on traditional currency-based transactions.
To support this initiative, banks are authorized to open and maintain Escrow accounts in approved currencies, with notification to Bangladesh Bank.
These accounts can be established either in the name of foreign counterparts or jointly with Bangladeshi parties, facilitating the seamless execution of payment settlements as outlined in the circular.
Under the counter-trade system, goods can be imported or exported in exchange for other goods, bypassing the need for foreign currency transactions.
However, it’s important to note that a monetary valuation may still be employed for accounting purposes, ensuring transparency and compliance with regulatory standards.
For instance, by importing goods worth 100 dollars from a company abroad, the local company exports another product of the same value to that company without paying money where no foreign currency required.
The central bank also instructed about operational procedures for settlement of payments under counter-trade arrangements including Credits to Escrow accounts can be made out of import payments in approved foreign currencies received from importers through local banking channel supported by documentary evidences.
The accounts can be debited for export payments, net of permissible commission or service charges, supported by documentary evidences to exporters through local banking channel.
No interest payable on balances held in Escrow accounts but unencumbered balances can be transferred, at the instructions of account holders, to other Escrow accounts in Bangladesh for facilitating payments against exports under counter-trade arrangements.
Subject to approval from Bangladesh Bank, Bangladeshi parties can open and maintain Escrow accounts in the countries of their counterparts for settlement of trade transactions under counter-trade arrangements, said the circular.
However, the import-export transactions under the ACU system cannot be settled through counter-trade.
