A proposal to settle bilateral trade between Russia and Bangladesh using the Indian rupee is currently under review, as both countries explore alternative payment mechanisms amid continuing Western sanctions on Moscow. The proposal seeks to establish a dedicated payment infrastructure to facilitate cross-border transactions, including the possibility of opening a branch of a Russian bank in Dhaka. While discussions are ongoing, officials have not yet finalised the framework or announced a timeline for implementation.

The proposed arrangement comes after efforts to use the Chinese yuan as a settlement currency reportedly failed to materialise. If approved, the mechanism would allow Bangladesh to make payments for Russian imports in Indian rupees, potentially reducing dependence on traditional international payment systems that have been disrupted by sanctions imposed on Russia following the Ukraine conflict. The move is seen as part of broader efforts by both nations to maintain stable trade despite restrictions affecting global financial transactions.

According to the proposal, establishing a Russian banking presence in Bangladesh would be a key component of the payment infrastructure, enabling smoother processing of trade-related transactions. Such an arrangement could help facilitate imports and exports while avoiding some of the challenges associated with sanctions on Russian financial institutions. However, authorities have emphasised that the proposal remains under consideration, and no official agreement has been reached between the parties involved.

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Russia and Bangladesh maintain significant economic ties, particularly in sectors such as energy, agriculture and infrastructure. Bilateral cooperation includes major projects such as the Rooppur Nuclear Power Plant, where Russia plays a central role. Ensuring uninterrupted payment channels has become increasingly important as global sanctions continue to reshape international trade and finance. The proposed use of the Indian rupee reflects a broader trend among several countries exploring local currency settlements to reduce reliance on conventional reserve currencies for cross-border trade.

If implemented, the arrangement could also enhance the role of the Indian rupee in regional trade by enabling transactions between two countries without requiring direct use of the US dollar or other widely used international currencies. Similar local-currency settlement mechanisms have gained attention in recent years as governments seek greater flexibility in conducting international commerce amid geopolitical uncertainties and evolving financial regulations.

For now, the proposal remains under review, with officials continuing to assess its feasibility, regulatory requirements and operational framework. Any final decision will depend on agreements between the governments, central banks and financial institutions involved. Until then, trade between Russia and Bangladesh will continue under existing payment arrangements while discussions on the proposed rupee-based settlement mechanism progress.

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