RMB comes into automated clearing system

China's RMB is now here in Bangladesh's fastest settlement system styled RTGS on expectation of easing pain of the businesses in trade payment, traditionally dominated by costly dollar.
Real Time Gross Settlement or RTGS is an online means of immediate transaction settlement from one bank to another. Through RTGS a transaction takes just 30 seconds for pressing digits to get on the information superhighway.
The Chinese currency will come into trade settlement on RTGS from February 04.
"Now a local bank can use RTGS for transacting the Chinese currency, RMB or Yuan, instead of foreign demand draft," says Bangladesh Bank spokesperson Md Mezbaul Haque.
Foreign demand draft is a manual process and takes time for paperwork before crossing boundaries.
He said a local bank, for example, Sonali Bank, can give the foreign currency to another local bank by using the fastest platform-RTGS.
"Banks now have adequate RMB to transact, so the central bank ordered on the matter," he said.
Earlier, the Bangladesh Bank had allowed five foreign currencies -the US dollar, UK Pound Sterling, Euro, Canadian Dollar and Japanese Yen-for automated trade transactions.
It started automated clearing operations in 5 foreign currencies (US Dollar, Pound Sterling, Euro, Japanese Yen and Canadian Dollar). Following this, the Chinese Yuan (CNY) was included in the RTGS system.
On Thursday, the Payment Systems Department of Bangladesh Bank issued a circular to this effect and sent it to the managing directors and chief executive officers of all scheduled banks in the country.
"From February 4, the RTGS system will start trading in Chinese Yuan currency. The central bank has instructed the banks to take necessary measures for this. In this regard, "Guidelines of FC Clearing through BD - RTGS System have been given."
The BB says in the circular that the RTGS system has been introduced instead of the FDD since September 4, 2022, with the aim of modern, contemporary, and immediate settlement of foreign- currency clearing operations in Bangladesh Bank.
The RTGS is an independent trading platform. A foreign-currency account should be opened for settlement of transactions in this manner. However, there is no restriction on the settlement of transactions of any amount.
The bank can charge a maximum of Tk 100 per transaction through the RTGS system. Most of the 11,000 branches of commercial banks are connected to this system.
According to the latest data of the central bank, Tk 4.73 trillion was settled against 832309 transactions in November last.
At the same time, against 60,000 transactions, $1.97 billion worth of foreign-currency settlement was done.
A local bank can open letter of credit or LC in RMB as it is one of the currencies in the IMF basket.
World's second-largest economy and population, China is the biggest trade partner of Bangladesh and the use of its currency is widespread.

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