Govt eyes correspondence banking with Russia

The government has initiated a move to establish correspondence banking arrangement with the Russian Federation aiming to facilitate bilateral trade between the two countries, officials said.  
As part of the move, a government delegation will visit the federation to negotiate on such banking facilities between the two nations soon, they said.  
The ministry of foreign affairs has proposed the bank and financial institutions division (BFID) send a delegation to Russia comprising members/representatives from the division, Bangladesh Bank, along with chambers representatives, especially from the BGMEA (Bangladesh Garment Manufacturers and Exporters Association).
The delegation members will discuss with their Russian counterparts on establishing the system.
The BFID has received the foreign ministry letter, an official of the division said.
"Russia is a potential export market for Bangladeshi merchandise. But there is no back to back L/C arrangement between Bangladesh and Russia. As a result, it is not possible to achieve the desired level of export earnings from the Russian market, Director (Europe) of Foreign Ministry Mohammad Khorshed Alam Khastagir told the FE on Tuesday.    
Russia is being continuously condemned by the rest of the world as they do not provide enough facilities for the foreign companies to do business there and have a strict set of laws for imports, industry insiders said.
Russian banks do not provide any letter of credit (L/C) facility. The only way to receive payment from Russia is via telegraphic transfer (T/T).
T/T payments are usually used when samples or small quantity shipments are transported by air, with documents such as air waybills, commercial invoices and packing lists sent along with the shipment, they added.
There is risk involved with T/T payment to the exporter if the importer is not honest. There are cases, where goods have been delivered to Russia but they denied or didn't pay the money according to the invoice, they said.
The foreign office consultation (FOC) between Bangladesh and the Russian federation was held in Moscow on March 21, 2016, where foreign Secretary Md. Shahidul Haque led the Bangladesh side.
During the consultation, the issue of correspondence banking arrangements to facilitate two-way trade prominently featured as businessmen from Bangladesh are facing various problems for the absence of banking facilities with Russia, he added.
Presently, some Bangladeshi items are exported to the former Soviet Union through third countries, especially Germany, sources said.  
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