Bangladesh Bank has opened a new channel for eligible cross-border trade transactions to be settled in Bangladeshi Taka through non-resident vostro accounts, giving exporters, importers and correspondent banks an additional way to handle international payments. Under the arrangement, authorised dealer banks can use Taka balances held in Non-Resident Taka accounts maintained for overseas branches and correspondent banks in trading partner countries. Previously, these accounts could hold Taka balances created against inward remittances in convertible currencies. The new circular expands their use by allowing those balances to settle export proceeds and other permitted transactions. Letters of credit, contracts and invoices will still be issued in freely convertible or otherwise admissible currencies, but the invoiced amount can be converted into Taka at the prevailing exchange rate for settlement through the relevant vostro account. Advance payments for eligible imports and exports are also permitted under existing foreign-exchange rules. The system has been designed to preserve important benefits for exporters. Businesses receiving export proceeds in Taka can remain eligible for foreign-currency retention facilities where applicable, allowing them to meet needs such as importing inputs or repaying Export Development Fund loans. Surplus Taka balances in the vostro accounts can also be used for permitted investments in Bangladesh, including foreign direct investment, portfolio investment, alternative investment funds and open-end mutual funds, subject to existing regulations. The new mechanism does not replace the country’s conventional trade-settlement channels. Instead, it adds another option for transactions where trading partners are willing to use a Taka-based arrangement. This flexibility can be useful because international trade often depends on efficient payment systems as much as on the movement of goods. Additional settlement routes may reduce dependence on third-country currencies in suitable transactions and create closer financial links with partner markets. For businesses, the value will depend on exchange-rate transparency, banking efficiency and the willingness of counterparties to use the system. For Bangladesh, the arrangement is also a step toward wider use of its own currency in international commercial activity. If banks and trading partners adopt the facility responsibly, it can diversify settlement options, improve convenience for exporters and importers, and strengthen the financial infrastructure supporting Bangladesh’s growing regional and global trade.
