Cross-Border Import-Export Transactions Can Now Be Settled in Taka

An opportunity has been created to settle some import-export transactions between Bangladesh and its foreign trading partner countries in Bangladeshi taka. To facilitate this, Bangladesh Bank has allowed the opening of taka “vostro” accounts in the names of banks in foreign partner countries. Initially, these accounts can be opened without depositing any convertible foreign currency. Funds received against imports will remain in these accounts and can later be used to pay for exports from Bangladesh and for other specified purposes. Bangladesh Bank issued a circular in this regard on Wednesday (September 23).

The circular said authorised dealer banks can open non-resident taka or vostro accounts in the names of their foreign branches and correspondent banks under the Foreign Exchange Transactions Guidelines-2018. Until now, these accounts could primarily be opened against remittances received in freely convertible foreign currencies. Under the new arrangement, the scope for settling import-export transactions with Bangladesh’s trading partner countries in taka has been expanded.

The most important aspect of the new directive is that authorised dealer banks in Bangladesh will be able to open taka vostro accounts in the names of correspondent banks of foreign partner countries. No convertible foreign currency will need to be deposited initially when opening these accounts.

These accounts will be opened against funds receivable for authorised imports. This means an importer in Bangladesh will be able to deposit taka against imports into the vostro account of the relevant foreign bank. The funds held in the account can later be used to pay for goods or services exported from Bangladesh. The funds may also be used for other purposes specified by Bangladesh Bank.

Bangladesh Bank said commercial transactions must be conducted through vostro accounts under existing arrangements with foreign trading partners. In this case, letters of credit, contracts and invoices for imports and exports must be denominated in freely convertible or approved currencies. However, the value of the currency mentioned in the invoice must be converted into taka at the prevailing exchange rate.

The circular said the necessary documents must be exchanged properly between the banks. Where there is no exemption from the requirement to exchange documents, the documents must be exchanged with the partner country’s bank through a safe, secure and effective method based on mutual understanding.

If import documents are received directly by the importer, the relevant instructions of FEPC Circular No. 30, issued on August 13, 2026, must be followed for payment of import value through the taka vostro account.

Bangladesh Bank has specified several methods for depositing and making payments from taka vostro accounts. The import value can be deposited into the vostro account from the importer’s own account or, if the importer’s bank and the relevant authorised dealer bank are different, through the local banking channel. Necessary supporting documents must be available in this regard. In addition, an overdraft facility can also be used in accordance with the circular issued on September 2.

On the other hand, funds can be transferred from the vostro account to the exporter’s account for payment of export proceeds based on the necessary documents. If the exporter’s bank is different, payment can also be made through bank transfer.

The arrangement also allows advance payments to be received from importers against imports and advance payments to be made to exporters against exports. In such cases, the relevant import and export regulations must be followed.

New instructions have also been issued regarding the purchase of necessary raw materials or inputs against exports after receiving export proceeds in taka.

Bangladesh Bank said that when export proceeds are received in taka, the inputs or raw materials required against the exports must also be procured in taka.

However, after converting export proceeds into foreign currency in accordance with the prescribed provisions, the authorised dealer bank may retain the foreign currency for the exporter. These funds can be used to pay for export-related inputs or to repay any foreign currency export development fund loan.

In addition, exporters may make payments in foreign currency for legitimate and genuine requirements instead of availing themselves of the retention quota facility, in accordance with the prescribed provisions.

If there is excess money in the taka vostro account after import-export transactions, its use will not be limited only to commercial transactions. Bangladesh Bank has permitted the use of such funds for several specified purposes.

According to the circular, surplus funds held in vostro accounts can be invested in foreign direct investment in Bangladesh, foreign portfolio investment, alternative investment funds and open-end mutual funds. Such investments, however, must comply with the prevailing rules and regulations.

The funds can also be used to provide loans to resident entities in Bangladesh, subject to approval from the relevant authorities. In addition, funds can be remitted abroad through legal means in accordance with the instructions of the account-holding bank. For issuing encashment certificates against eligible investments, the prescribed form under the Foreign Exchange Transactions Guidelines-2018 must be used.

Although trade can be conducted through taka vostro accounts, no exemption has been given from the existing import-export reporting requirements. For these transactions, the provisions of the IMP form for imports and the XP form for exports must be followed.

The authorised dealer bank making import payments through the vostro account must report the transaction details to Bangladesh Bank using the prescribed IMP form. The necessary matching formalities must also be completed.

For export transactions, all existing formalities related to the XP form must be followed. Information on the receipt of export proceeds must also be reported properly. However, when reporting to Bangladesh Bank, the transaction information must be provided in the currency used in the original invoice.

If it is necessary to use the local currency of a partner country or any other non-freely convertible currency to settle legitimate commercial transactions with that country, authorised dealer banks have also been given an opportunity to do so.

With prior approval from Bangladesh Bank, a nostro account can be maintained in the relevant country’s bank in that currency. This means the new arrangement is not limited to taka vostro accounts; transactions can also be settled in the partner country’s local currency when necessary.

Authorised dealer banks wishing to establish a taka vostro arrangement with a foreign correspondent bank must inform the head office of Bangladesh Bank.

At that time, they must provide necessary information, including the name and country of the correspondent bank and the types of transactions to be settled.

Banks are also required to conduct proper due diligence when operating taka vostro accounts. The authorised dealer bank must conduct appropriate due diligence on the relevant foreign correspondent bank.

At the same time, the bank must ensure the genuine basis and legitimacy of the transactions. All existing regulatory instructions, including Know Your Customer (KYC) requirements and Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) standards, must be followed.

Bangladesh Bank said other relevant instructions concerning import and export transactions will remain unchanged. Authorised dealer banks have been asked to inform their respective customers about the contents of the circular.