Dollar transactions thru RTGS cross $10b in seven months

Foreign currency transactions through the Bangladesh Bank's online platform Real Time Gross Settlement (RTGS) crossed $10 billion within seven months of launch.

According to central bank data, $1.74 billion was transacted in March, which is 7.76% higher than the $1.61 billion transacted in February. Similar to March, most months saw an increase in both the number and volume of transactions compared to the previous month.

Local currency transactions using RTGS, through which transactions of more than Tk1 lakh can be settled instantly, started in 2015. Foreign currency transactions were added to RTGS last September, making the process more efficient than the previous manual method of interbank settlement, which was time-consuming and troublesome.

The central bank has been using the RTGS platform since 4 September to settle transactions in five foreign currencies, including the US dollar, pound, euro, the Canadian dollar and yen.

In this system, transactions are settled from one bank to another on a currency basis, such as dollar against dollar or euro against euro. Since its launch in September, the RTGS platform has facilitated transactions totalling $10.4 billion as of March.

Mohammad Abdul Mannan, deputy general manager and Treasury Division Head at Pubali Bank, explains the process of RTGS transactions with The Business Standard. 

"In this process, we transfer dollars from our nostro account in the central bank to the RTGS account as soon as banking hours start in the morning. If a bank claims a dollar from us during the working hours of the day, the payment is made immediately from the RTGS account," he said. 

"Again, we receive payments from any bank in the same way. At the end of the day's transaction hours, the money deposited in the RTGS account is transferred again to our nostro account in the central bank."

Abdul Mannan added that earlier, many banks used to bounce (refuse to pay) demand drafts for dollar payments, but with the RTGS platform, the chances of such instances have been reduced.

According to Bangladesh Bank data, there were a total of 3,32,685 transactions till last March. In the first month of September, $770 million were paid against 20,518 transactions. Last March saw 60,420 transactions.

Sadiquzzaman Khan, Treasury Head of Bank Alfalah, told TBS, "Each bank used to employ one or two messengers, whose job was to take any dollar demand draft issued to the central bank and get it passed. After passing, dollars would come to our account."

"In most cases, it would take us one business day to do this. Besides, if a customer wanted to do a dollar transaction through the issue of a demand draft to transfer his export proceeds to another bank, it would sometimes take up to 3/4 days."

Sadiquzzaman Khan said, "Currently, if a customer wants to withdraw dollars from us to another bank even 15 minutes before the transaction time closes, we can do it instantly." 

Due to the introduction of RTGS in dollar transactions, banks' mobility has increased a lot and transactions have become smooth, he continued.