No transactions with Sri Lanka through ACU, BB asks banks

Bangladesh Bank (BB) has asked banks not to do any trade-related transactions with Sri Lanka through the Asian Clearing Union (ACU) mechanism.

ACU is a payment arrangement whereby the participants settle payments for intra-regional transactions among the participating central banks on a net multilateral basis.

The central bank issued the directive as the Central Bank of Sri Lanka (CBSL) in a self-motivated move decided to remain temporarily suspended from the ACU mechanism with effect from October 14, according BB circular issued on the day.

Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of the Tehran-based ACU headquarter. The central banks of the countries have to make payments every two months.

A BB official said banks in Bangladesh usually settle transactions for both export and import through the ACU mechanism.

But, it becomes very difficult for local businesses to make foreign transactions with the Sri Lankan banks because of the CBSL's decision to exclude its nation from the ACU mechanism.

The BB official also informed that if any Bangladeshi bank wants to settle a transaction with any Sri Lankan commercial bank, they can do it by ignoring the ACU mechanism.

The island country has been facing an acute shortage of foreign exchanges in recent times, which is why it has even faced difficulties to import essential commodities.

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