Pioneering the First INR Export Transaction for Reduced FX Risk and Increased Trade Flows Between Bangladesh and India

Case study: Walton Hi-Tech Industries

When regulators in Bangladesh approved Indian rupee (INR) trade transactions, electronics manufacturer Walton Hi-Tech Industries (Walton) became the first to benefit from the exchange-rate gains. With Standard Chartered facilitating the country’s first-ever INR trade, Walton and its fellow exporters can now enjoy smoother, less volatile trade with Indian buyers.

By completing the transaction in INR instead of USD, Walton broadened its export proceeds base and was able to more promptly issue importer payments. In pioneering the first transaction, Standard Chartered has paved the way for local exporters like Walton to reduce their exposure to FX volatility and minimise the impact of the USD liquidity squeeze. Indeed, other banks have subsequently followed suit with this service, underscoring the trailblazing approach from Standard Chartered.

Background

Walton is an electronics manufacturer and exporter headquartered in Bangladesh. As one of the country’s largest electronics exporters, it generates annual revenues of more than USD740m.

Challenges

Increasing uncertainty around FX volatility has become a major issue for most Bangladeshi businesses in recent years. With their importing buyers also grappling with FX volatility, large exporters such as Walton have also struggled with import payments. Moreover, this has been compounded by USD liquidity concerns that have led to local currency devaluation.

India is one of Walton’s largest markets, with the company exporting approximately USD12m worth of goods to the country annually. Execution of the associated transactions in INR would help ease FX concerns and facilitate smoother trade between these two markets. However, foreign transactions in INR were previously not permitted in Bangladesh.

Solution

In September 2023, Bangladesh Bank, the country’s central bank, began allowing foreign transactions in INR, creating an opportunity for Walton to generate exchange-gain benefits.

As the company’s incumbent bank and Bangladesh’s largest international FI , Walton elected Standard Chartered to help it take advantage of this new opportunity. With its vast experience facilitating trade flows to and from Bangladesh, the bank moved quickly to set up what became the country’s first-ever INR export transaction. The bank obtained swift regulatory approvals from both central banks, opened corresponding accounts in Bangladesh, and completed the set-up to book the export transaction.

Walton subsequently received more than INR1m (approx. USD12,000) in advanced export proceeds, and used the funds to make import payments to its Indian suppliers.

_Disclaimer

_{This material has been prepared by one or more members of SC Group, where “SC Group” refers to Standard Chartered Bank and each of its holding companies, subsidiaries, related corporations, affiliates, representative and branch offices in any jurisdiction, and their respective directors, officers, employees and / or any persons connected with them. Standard Chartered Bank is authorised by the United Kingdom’s Prudential Regulation Authority and regulated by the United Kingdom’s Financial Conduct Authority and Prudential Regulation Authority.}

_{This material has been produced for reference and information purposes only, is not independent research material, and does not constitute an invitation, recommendation or offer to subscribe for or purchase any of the products or services mentioned or to enter into any transaction.}

_{Some of the information herein may have been obtained from public sources and while SC Group believes such information to be reliable, SC Group has not independently verified the information. Information contained herein is subject to change at any time without notice. Any opinions or views of third parties expressed in this material are those of the third parties identified, and not of SC Group.}

_{While all reasonable care has been taken in preparing this material, SC Group makes no representation or warranty as to its accuracy or completeness, and no responsibility or liability is accepted for any errors of fact, omission or for any opinion expressed herein. The members of SC Group may not have the necessary licenses to provide services or offer products in all countries, and / or such provision of services or offer of products may be subject to the regulatory requirements of each jurisdiction.}

_{This material has not been prepared with regard to the specific objectives, situation or particular needs of any particular person, and is not meant to be comprehensive. SC Group does not provide any information technology, accounting, legal, regulatory, tax or investment advice and this material should not be relied on as such. Any comments on information technology, accounting, legal, regulatory, tax or investment matters contained in this material should not be relied on or used as a basis to ascertain the various results or implications arising from the matters contained herein, and you need to exercise your own independent judgment (with the advice of your information technology, accounting, legal, regulatory, tax, investment and other professional advisers as necessary) with respect to the risks and consequences of any matter contained here in. Please note that there have been reports of email phishing targeting bank customers. Please do NOT click on the links in any unusual or suspicious emails, or provide any sensitive personal details, login credentials, PINs, OTPs. We would never ask you to reveal sensitive personal information or passwords, or validate your account over emails, SMSes, or phone calls. If you receive any suspicious emails, SMSes, or phone calls, please call us immediately. Please note that as the recipient, it is your responsibility to check the email for malicious software. SC Group expressly disclaims any liability and responsibility whether arising in tort or contract or otherwise for any damage or losses you may suffer from your use of any fraudulent hyperlinks or use of / reliance on the information contained herein.}

_{You may wish to refer to the incorporation details of Standard Chartered PLC, Standard Chartered Bank and their subsidiaries by visiting the contact us page of our website and viewing our locations.}

_{This material is not for distribution to any person to which, or any jurisdiction in which, its distribution would be prohibited. If you have received this email by mistake, please inform us by email and then delete the message. A translated version in your local language will be made available upon request. Please reach out to your relationship manager to obtain a copy.}

_{© Copyright 2024 Standard Chartered Bank. All rights reserved. All copyrights subsisting and arising out of these materials belong to Standard Chartered Bank and may not be reproduced, distributed, amended, modified, adapted, transmitted in any form, or translated in any way without the prior written consent of Standard Chartered Bank.}