Transactions with Russian and Belarusian banks have officially stopped as sanctions have gone into effect from Saturday.
As a result, Bangladeshi banks will no longer be able to conduct Society for Worldwide Interbank Financial Telecommunication (SWIFT) transactions directly with banks of the aforementioned countries.
Although this will not have a major negative impact on the country's economy, the financing of the Rooppur Nuclear Power Plant may be affected, experts say.
And due to the sanctions Bangladeshi banks will have to increase their dependence on Chinese banks for transactions with Russia and Belarus.
Arfan Ali, chairman of Swift Users Group in Bangladesh and managing director of Bank Asia, told the media: "Not all Russian banks are subject to this ban, but we still have worries. This is because Russia has an annual export of $600 million from Bangladesh.
“Now we have to rely on Chinese banks for these exports. This will increase the cost and risk,” he explained.
According to Bangladesh Bank, about 80% of the goods that Bangladesh exports to Russia are transacted through banks in Singapore and Hong Kong.
In the seven months till January of the current 2021-22 fiscal year, about $460 million worth of goods have been exported from Bangladesh to Russia, data from the central bank and the Export Promotion Bureau (EPB) shows.
In the first three months till September of FY22, goods worth $75.4 million were imported from Russia.
Earlier, in FY21, Bangladesh exported various products worth $665.3 million to Russia and at the same time, goods worth $466.7 million were imported.
Centering the Russia-Ukraine war, the European Union (EU) earlier announced the decision to impose sanctions on some Russian and Belarusian banks from the SWIFT network, an international organization that executes financial transactions.
Spokesperson and Executive Director of Bangladesh Bank Serajul Islam said: “The central bank had earlier advised all commercial banks in Bangladesh to be cautious in dealing with EU-banned banks because it involves various international agreements.”
This means Bangladesh's banks would be unable to do business with the Russian lenders either directly under the Relationship Management Application (RMA) provided by SWIFT.
Local banks have to follow the US Patriot Act to maintain banking relationships with American banks. Under the act, Bangladeshi banks cannot transact with the lenders that face an embargo imposed by the US government or else they will face punitive measures.
