Reserve
Bank and the finance ministry on
Wednesday, 7 Sept. 2022 asked top management of banks and representative of
trade bodies to push exports and import transactions in rupee.
It was
stressed during a meeting that banks should connect with their foreign
counterparts for opening special rupee vastro
accounts to facilitate cross-border trade in Indian currency rather than
popular mode dollar, sources said.
Trade
associations and their foreign trading partners should explore opportunities to
make use of the framework, sources added.
The
meeting, which saw participation from various stakeholders, including officials
of external affairs and commerce ministries, Indian Banks' Association, urged
embassies abroad to promote the mechanism through diplomatic channels.
According
to sources, countries like Sri Lanka, Argentina and Zimbabwe may be interested
in settling bilateral trade in rupee.
RBI in
July issued a detailed circular asking banks to put in place additional
arrangements for export and import transactions in Indian rupees in view of
increasing interest of the global trading community in the domestic currency.
The
announcement by the Reserve Bank of India (RBI)
to allow cross-border trade transactions in rupee is a timely move and a step
towards internationalisation of the currency.
Currently,
a large part of bilateral trade between India and Russia is getting settled in
rupee due to sanctions imposed by the US and Europe following Moscow's attack
on Ukraine.
The RBI
had said for settlement of trade transactions, the concerned banks will require
special rupee vostro accounts of correspondent banks of the partner trading
country.
"Indian
importers undertaking imports through this mechanism shall make payment in INR
which shall be credited into the special vostro account of the correspondent
bank of the partner country, against the invoices for the supply of goods or
services from the overseas seller/supplier," it had said.
Exporters
undertaking overseas shipments of goods and services through this mechanism
will be paid the export proceeds in Indian rupees from the balances in the
designated special vostro account.
As per
the circular, the rupee surplus balance held can be used for permissible
capital and current account transactions in accordance with the mutual
agreement.