Russia proposes Indian rupee-based trade & opening of Russian bank branch in Dhaka to bypass US sanctions
In a Nutshell:
- Russia wants Bangladesh to use Indian rupees for bilateral trade instead of relying on existing payment channels.
- Moscow has proposed a dedicated payment system and opening a Russian bank branch in Dhaka.
- Bangladesh and Russia will discuss the proposals at their next intergovernmental commission meeting expected later this year.
Why it Matters
Russia's latest proposal is the newest attempt to solve a payment problem that has followed Bangladesh since sanctions disrupted Russian banking channels after its invasion of Ukraine in 2022. The issue has already affected Rooppur loan repayments, where Bangladesh has been unable to transfer funds directly to Russian banks, showing how international sanctions can create problems even for countries not directly involved in the dispute.
What We Think
Nearly a decade after construction of the Rooppur Nuclear Power Plant began in 2016, Bangladesh is still dealing with payment problems linked to the Russian loan that finances the project. For more than three years since sanctions were imposed on Russian banks after the Ukraine war began, Dhaka has struggled to transfer repayments through normal channels. Previous proposals, including settling payments in rubles, joining Russia’s SPFS payment system and routing transactions through Chinese banks, did not move forward because Bangladeshi banks feared possible US sanctions exposure and faced legal and financial complications. The rupee proposal could ease one hurdle, but Bangladesh needs a payment system that keeps the project and wider trade moving without leaving the country vulnerable to another set of financial pressures
