Bangladesh and India on Tuesday commenced trading in Indian rupee (INR), signalling one more global shift away from US dollar-denominated trade finance.

Letters of credit (L/Cs) featured in the first transactions that were announced at an inaugural event at Le Meridien hotel in the capital of Bangladesh, Dhaka.

The event was attended by Bangladesh Bank governor, Abdur Rauf Talukder, and Indian high commissioner to Bangladesh, Prannoy Kumar Verma, who jointly inaugurated the new facility.

Inaugural L/Cs transactions

At a press conference during the event, Bangladesh Bank executive director and spokesperson, Mezbaul Haque, said that two Bangladeshi companies had participated in the first INR-denominated L/C transactions.

He said Tamim Agro had opened an export L/C with the State Bank of India (SBI's) Bangladesh office for more than INR16 million (US$194,000) while Nita Company opened an import L/C for around INR12 million with ICICI Bank. The central banker did not name the companies' Indian trading partners.

Bank connections

Bangladesh Bank had already given permission to three banks - Sonali Bank, Eastern Bank and SBI Bangladesh - to open nostro accounts with their counterparts in India.

Eastern Bank and SBI Bangladesh have already opened nostro accounts with India's ICICI Bank and SBI, while a Bangladesh Bank official has reportedly said that Sonali Bank will follow suit shortly.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.