Bangladesh to launch Taka Pay card and also linked with India's RuPay card network

Bangladesh to launch Taka Pay card and also linked with India's RuPay card network:

The Bangladesh Bank has decided to launch a taka-rupee based debit card in the country from September, aiming to save dollars.

Edited: Initially, the plan was to introduce the card by September. Later, the Bangladesh Bank Governor Abdur Rouf Talukder said it would be issued in December.

Bangladesh: From September 2023, Bangladesh and India will start using the Bangladeshi taka and Indian rupee for trade. The Bangladesh Bank will also introduce a debit card dubbed the "Taka Pay Card" at the same time which will enable customers to withdraw either rupees or taka. With this card, users will be able to pay for a variety of things, including domestic purchases with taka, and spend in Indian rupees while visiting India.

"Taka Pay Card" owners will be able to use it in Bangladesh as a debit card. They will have the comfort of utilising this card to conveniently spend up to $12,000 in rupees during their trips to India. The launch of this card is anticipated to do away with the requirement for two currency exchanges, reducing the 6 percent spending loss associated with converting taka to dollars and then dollars to rupees. With approximately 21.56 lakh Bangladeshis traveling to India on tourist visas in 2017, Bangladesh enjoys the distinction of being one of the countries with the greatest number of tourists. Not only that, in 2022, Bangladeshis received 15 lakh visas from the Indian High Commission in Bangladesh. Bangladesh will be able to save a ton of money thanks to the card because many people from Bangladesh visit India for medical care, tourism, and religious reasons. The Bangladeshi currency reserve, which has been under pressure due to rising import costs, would benefit if travellers from Bangladesh could use the debit card to pay for purchases made in India.

Averting the system loss

Indian and Bangladeshi nationals experience a minimum 6 percent loss in rupees or taka, as I previously mentioned. Bangladeshi nationals visiting India must affix currency endorsements on their passports. These dollars must be exchanged for rupees before being used in India. Travelers have reported twice losing money as a result of currency conversion. In recent months, the value of the US dollar in Bangladesh has varied between Tk 106 and Tk 110. Therefore, it costs between Tk 10,600-11,000 approximately to purchase $100. These $100 can be exchanged for 8,200-8,300 Indian rupees. However, if this purchase was made directly using the taka and rupee, the same amount of taka would buy between 13,000-14,500 Indian rupees. It is a notable difference.

Small changes can have a big impact

This "Taka Pay Card" is merely a modest beginning. If this programme is successful, the concept of it might also be used to increase bilateral trade between Bangladesh and India. The Bangladesh Bank reports that during the fiscal year 2021-2022, Bangladesh imported products worth $8,916 million. Of the total, $1,369 million worth of goods were imported from India. Bangladesh sold commodities to India worth $200 million during the same fiscal year. In other words, the total value of imports and exports between the two nations is $1,568 million. Bangladesh is also being affected by the current geopolitical environment. Russia, China and India are all gradually moving away from the dollar. Alternatives to the dollar are being considered.

The $200 million that Bangladesh will save by conducting business in rupees will allow the government to import necessities from other nations. This will be advantageous for both nations. Since these transactions would be the result of bilateral talks, there will be less expenses associated with frequent currency conversions, and Bangladesh can reduce its currency exchange costs.

India is Bangladesh's closest neighbour and one of its largest trading partners. There is also frequent movement of people between the two countries. This convenience will be particularly beneficial for Bangladeshi tourists who frequently visit India. Considering the current declining dollar reserve scenario facing Bangladesh, this initiative can be a good thing for the country.