Last updated: September 19th, 2022 12:07 PM
RBI allows International Trade Settlement in Indian Rupees
On July 11th, 2022, the Reserve Bank of India announced a big decision by allowing trade settlements between India and other countries in Indian Rupees (INR). This measure is aimed at facilitating the growth of global trade with emphasis on export from India and to support the interests of the global trading community in Indian rupees. The decision to allow INR in international trade settlements is considered an important step to facilitate trade with Russia, Iran, and Sri Lanka. To accept payments in rupees, authorized dealer banks will have to open special Rupee Vostro accounts. The present article briefs the International Trade Settlement in Indian Rupees. For more details on Foreign Trade Policy, click hereThe Gist of RBI Circular
The important announcement made via the RBI Circular dated International Trade Settlement on 11th July 2022 is listed as follows:- RBI has also placed an additional arrangement for invoicing, payment, and settlements of exports/imports in Indian rupees.
- As mentioned above, the Circular further states that the exchange rate between currencies of two trading partner countries may be market determined and the entire process will be carried out using a special VOSTRO account.
- It is also stated that the Rupee surplus balance accumulated in such account may be used for permissible capital and current account transactions in accordance with mutual agreement.
Why International trade Settlement in Rupees?
When countries import and export goods and services, they have to make payments in a foreign currency. Since the US Dollar is the world
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