The Reserve Bank of India (RBI) on Wednesday announced a series of measures to facilitate wider use of the Indian Rupee (INR) and other local currencies in international trade transactions.
RBI Governor Sanjay Malhotra said the government has been steadily working to internationalise the rupee, making it widely accepted for global trade, finance, and investment. “We have been making steady progress in this regard,” he added.
As part of the initiative, Authorized Dealer banks in India and their overseas branches may soon be allowed to lend in INR to residents of Bhutan, Nepal, and Sri Lanka, including banks in these countries, to support cross-border trade. Amendments to regulations will be notified shortly.
To further promote settlement of cross-border transactions in INR and other local currencies, the RBI plans to expand reference rates published by Financial Benchmarks India Limited (FBIL). Currently, FBIL publishes reference rates for USD, EUR, GBP, and JPY against INR. The new measures will include select currencies of India’s major trading partners, enabling banks to quote directly in more currency pairs and reducing multiple conversions, thus making trade more efficient.
The RBI has also expanded investment options for holders of Special Rupee Vostro Accounts (SRVAs), introduced in July 2022 to facilitate invoicing, payments, and settlement of exports and imports in INR. SRVA holders will now be allowed to invest surplus balances not only in government securities and treasury bills but also in corporate bonds and commercial papers.