[ Online ] 15/03/2022
 
BB asks banks to be cautious in transactions with Ukraine
The Bangladesh Bank has asked all scheduled banks to be cautious in opening letters of credit for trade-related transactions with Ukraine.

The central bank came up with the instruction following Russian military attacks to its bordering country, a BB official said.

The intention of the BB instruction was to safeguard the country’s businesses as payments against any trade may remain stalled for an unknown time due to the Russia-Ukraine war, he said.

Bankers said that though the BB asked for being cautious now, almost all the banks had refrained from opening LCs after the Russia’s invasion in Ukraine on February 24.

Ukraine on February 28 announced closure of all of its commercial ports.

The ports will remain closed until the Russian operations end, according to Russian government statement.

Not only the banks but also the country’s businesses which have export and import connections with Ukraine were observing the war situation before taking any fresh decision, the bankers said.

NRB Commercial Bank chairman Parvez Tamal told New Age, ‘The central bank has instructed banks to be cautious and we are following the instruction due to the closure of Ukraine ports.’

‘At present, we do not have any transaction with Ukraine,’ Parvez said.

Speaking about the BB’s instruction, Mutual Trust Bank managing director Syed Mahbubur Rahman told New Age, ‘The customers are basically waiting since no shipment or currier can be made to Ukraine but the central bank has not asked to stop opening LCs. The BB instruction is to be cautious,’ he said.

However, if anyone is confident enough to ship goods and receive payments through other country like Poland there is no barrier, he said.

Another BB official said that Bangladesh’s import to and export from Ukraine was not significant.

Apart from the transactions with Ukraine, the country’s banks were also cautious in making transitions with Russia following the expulsion of seven Russian banks from SWIFT.

The sanction with the banks came into force on March 12.

The seven Russian banks facing SWIFT sanction are VTB Bank, Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank and Bank for Development and Foreign Economic Affairs, also known as VEB.

Although the overall trade of Bangladesh with Russia is not very high, the transaction-related problems are likely to be acute in the private sector in the coming months unless the government takes alternative measures, said the bankers and businesses.

In the 2018–19 financial year, Bangladesh exported $548.26 million worth of goods to Russia against the import of $653.05 million, according to the Bangladesh embassy in Moscow.

One of the sanction-hit banks, VEB, has already advised state-owned Sonali Bank to keep transactions on Rooppur Nuclear Power Plant suspended, mentioned Bangladesh Bank spokesman Serajul Islam on Sunday in relation to difficulties arising out of the ban.