Visa Worldwide Pte. Ltd. (Visa) partnered with Eastern Bank Ltd (EBL) to roll out a unique solution by offering trustee services to its member banks in Bangladesh in order to address the domestic settlement issues by maintaining cash collateral with the Trust.
A virtual signing ceremony to this effect was held on Monday between EBL and Visa, reads a press release.
This innovative trustee service towards domestic settlement obligations will provide Visa clients with the option to ensure security in the form of cash collateral in local currency (BDT) against domestic transactions.
Previously such collateral (both for domestic and cross-border settlement obligations) were provided by way of USD denominated standby letters of credit (SBLC) issued by international banks favoring Visa.
The benefits associated with this structure entails cost savings and simplified process for Visa member banks.
Currently, Visa has 29 member banks in Bangladesh and the total collateral amount against domestic transactions is approximately $25 million, reads the statement.
To celebrate this alliance, Deputy Governor of Bangladesh Bank Ahmed Jamal was present as the chief guest at the virtual signing ceremony.
Soumya Basu, Visa's country manager for Bangladesh, Nepal and Bhutan along with representatives from EBL namely Managing Director and CEO Ali Reza Iftekhar, Deputy Managing Director and Head of Corporate Banking Ahmed Shaheen, DMD and Head of Retail and SME Banking M Khorshed Anowar, and Riad Mahmud Chowdhury, DMD and Head of Corporate Business were also present.
Deputy Governor Ahmed Jamal appreciated the initiative and said this innovative structure would reduce the outflow of foreign exchange from the country. He believes that majority stakeholders will be interested to enroll in this alternative and innovative arrangement instead of providing the USD denominated standby letters of credit considering domestic settlement issue, reads the release.
The Managing Director and CEO of EBL Ali Reza Iftekhar said this deal was a new chapter in EBL- Visa relationship and historic one for the local banking industry. EBL has always been a pioneer in product and service innovation. This alternative solution to USD denominated standby letters of credit is not only a cost effective option for Visa member banks in Bangladesh but has also other additional benefits for its stakeholders.
According to EBL DMD and Head of Retail and SME Banking M Khorshed Anowar, with the introduction of the service, collateral execution structure of Visa principal member banks in Bangladesh will get a new dimension.
Soumya Basu, Visa's Country Manager for Bangladesh, Nepal & Bhutan thanked EBL for partnering with Visa in rolling out this unique collateral arrangement and urged VISA's member banks in Bangladesh to take advantage of this seamless and cost-efficient business arrangement in the market.