Russia has proposed settling bilateral trade with Bangladesh in Indian rupees to overcome payment difficulties caused by U.S. sanctions on Russian banks, while also renewing its proposal to establish a Russian bank branch in Dhaka and create a dedicated bilateral payment mechanism.

Officials at the Economic Relations Division (ERD) said the proposals will be discussed at the upcoming meeting of the Bangladesh-Russia Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation, expected to be held in September or October. A preparatory meeting is scheduled to finalize Bangladesh’s agenda ahead of the talks.

According to ERD officials, sanctions imposed on Russian banks following the Russia-Ukraine war have disrupted conventional payment channels between the two countries. In response, Moscow has proposed using Indian rupees to settle bilateral trade.

Russia has also revived an earlier proposal to establish a Russian bank branch in Bangladesh and develop a separate payment infrastructure to facilitate transactions. A similar proposal was made during the previous Awami League government but did not progress after Bangladesh Bank sought the Foreign Ministry’s opinion.

The sanctions have complicated loan repayments for the Russian-funded Rooppur Nuclear Power Plant. Bangladesh is currently unable to transfer loan installments to Russia because of restrictions on Russian financial institutions. Although Russia initially proposed using the Chinese yuan for repayments, banks in Bangladesh and China reportedly declined due to concerns over possible sanctions.

As an interim arrangement, Bangladesh has been depositing the loan installments into a Russia-linked account at Sonali Bank. However, the funds remain inaccessible to Russian banks under the current sanctions.

Officials said Russia has also proposed broadening economic cooperation by establishing a Russia-Bangladesh Business Council, creating a registry of reliable Bangladeshi garment exporters for Russian buyers, strengthening cooperation between small and medium-sized enterprises, and supporting the development of special economic zones in Bangladesh.

Bangladesh’s priorities at the upcoming commission meeting include securing technology transfer, expanding cooperation in renewable energy and power generation, and enhancing collaboration in the digital economy, agriculture, food security, skills development, connectivity, and logistics.

Separately, during a meeting at the Secretariat, Commerce Adviser Khandaker Abdul Muqtadir and Russian Chargé d’Affaires Vyacheslav Sentyurin discussed food security and trade cooperation. Russia expressed interest in supplying around 280,000 tonnes of urea fertilizer to Bangladesh Chemical Industries Corporation (BCIC) under a government-to-government arrangement at $10 per tonne below prevailing international market prices. The two sides also discussed expanding cooperation in the supply of essential commodities, including sunflower oil, pulses and other food products.

Welcoming Russia’s interest in strengthening bilateral ties, the commerce adviser said Bangladesh remains committed to expanding trade, investment and economic cooperation with Russia on the basis of mutual benefit.