Banks asked not to transact with Sri Lanka through ACU mechanism

The Bangladesh Bank today asked banks not to do transactions with Sri Lanka through the ACU mechanism.

The ACU is an arrangement through which participating countries settle import payments for intra-regional transactions.

BB has taken the decision as the Central Bank of Sri Lanka (CBSL) decided to remain temporarily suspended from the ACU mechanism with effect from October 14, according to a BB notice.

Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of the Tehran-headquartered ACU. The central banks of the countries have to make payments every two months.

A BB official says that banks in Bangladesh usually settle transactions for both export and import through the ACU mechanism.

So, it is difficult for local businesses to do foreign transactions with Sri Lankan banks due to the CBSL's decision to exclude its nation from the ACU mechanism.

The BB official, however, says that if any Bangladeshi bank wants to settle a transaction with a Sri Lankan commercial bank, they can do it by ignoring the ACU mechanism.

The island country has been facing an acute shortage of foreign exchanges in recent times, which is why it has even faced difficulties to import essential commodities.