News of US ban on ACU
Mahfuja Mukul: The US Office of Foreign Assets Control (OFAC) has reportedly issued instructions to US banks not to settle transactions related to the Asian Clearing Union (ACU). In this regard, the Indian media has published a news in the Economic Times. In view of this, the banks of India have approached the central bank of the country, Reserve Bank of India or RBI, according to Economic Times. The issue is being discussed in various quarters. This has also caused concern in Bangladesh Bank.
In such a situation, Bangladesh Bank has sent a letter to the Central Bank of India, Reserve Bank of India, through an e-mail yesterday. An official of Bangladesh Bank, who did not want to be named, confirmed this information to Daily Industry.
According to related sources, Bangladesh Bank sent a letter to the Central Bank of India yesterday after seeing the related news in the media. The letter asked whether they are aware of the matter or not. Because if the news related to this is true, there will be complications in settlement of import and export transactions. Because Bangladesh imports a large amount of goods from India. If transactions cannot be done through Acu, the cost of importing goods will increase. Because the transaction cost is higher through other channels.
Earlier on September 22, Economic Times reported that the OFAC office of the United States has issued instructions to banks in that country not to settle transactions related to the Asian Clearing Union or ACU, Indian banks have approached the country’s central bank, the Reserve Bank of India or RBI.
In this regard, a senior Indian banker told the Economic Times, “Something has happened regarding the location of Aku’s head office. We have been given the impression that (OFAC) has asked all concerned US banks to suspend payment processing.
ACU was formed on December 9, 1974 under the initiative of the United Nations subsidiary ESCAP to promote regional cooperation. Its head office is in Tehran, the capital of Iran. Akura’s member countries are Bangladesh, Bhutan, Iran, India, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka.
ACUR member countries have no other means of dealing with India. That is why Indian commercial banks have sought RBI’s intervention. They want to solve this problem. However, Economic Times did not respond to Acu and RBI’s comments on the matter.
India’s problem is that the country imports less than what it exports to ACU member countries. Because of that, India’s huge amount of money is trapped. In 2020, India’s transaction through ACU was $8.4 billion.
AKU is an inter-regional settlement agency. Through this, inter-regional transactions are settled. The advantage of the transaction through Acu is that the central banks do not have to pay the entire amount of the transaction, rather they pay the rest of the amount except what they owe to each other. As a result, the US sanctions may further complicate trade between ACU member countries.
When asked about this, the Executive Director and Spokesperson of Bangladesh Bank told Daily Industry that there is a secretariat board in ACU. If there was any such instruction, we would have received the letter.
When asked how the transactions with the member countries will be done if the ACU system is closed, the spokesperson said, the payment will be made in the same way as we usually import and export with other countries except for ACU. In this case the cost is high. Again, there are complications. Because this transaction requires immediate payment. It is available for two months through Aku. I will be deprived of these benefits.
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