The Reserve Bank of India (RBI) on Wednesday announced fresh measures to promote wider use of the Indian Rupee in cross-border transactions, as part of its strategy to gradually internationalise the currency.
For months now, the government has been taking steps to internationalise the rupee, which refers to the process of making the Indian currency widely accepted and used for global trade, finance, and investment.
As part of latest announcements, RBI Governor Sanjay Malhotra proposed three measures:
1. The apex bank said authorised dealer (AD) banks will now be permitted to extend loans in Indian Rupees to non-residents from Bhutan, Nepal and Sri Lanka for trade-related transactions. This is expected to deepen trade settlement in INR with neighbouring economies.
Also Read: RBI reforms to make it easier for NRIs to invest, trade and remit funds
It is to be further noted that 90% of India's exports to South Asia were to these four nations in 2024/25, amounting to nearly $25 billion, as per Commerce Ministry data.
2. In a second move, the RBI plans to establish transparent reference rates for currencies of India’s major trading partners. The step aims to make pricing more predictable and strengthen the use of rupee in invoicing and settlement of international trade.
3. The third proposal seeks to widen the use of balances in Special Rupee Vostro Accounts (SRVAs). These balances, which currently facilitate trade settlement in local currency, will now be made eligible for investment in corporate bonds and commercial papers.
(More to come)
For months now, the government has been taking steps to internationalise the rupee, which refers to the process of making the Indian currency widely accepted and used for global trade, finance, and investment.
As part of latest announcements, RBI Governor Sanjay Malhotra proposed three measures:
1. The apex bank said authorised dealer (AD) banks will now be permitted to extend loans in Indian Rupees to non-residents from Bhutan, Nepal and Sri Lanka for trade-related transactions. This is expected to deepen trade settlement in INR with neighbouring economies.
Also Read: RBI reforms to make it easier for NRIs to invest, trade and remit funds
It is to be further noted that 90% of India's exports to South Asia were to these four nations in 2024/25, amounting to nearly $25 billion, as per Commerce Ministry data.
2. In a second move, the RBI plans to establish transparent reference rates for currencies of India’s major trading partners. The step aims to make pricing more predictable and strengthen the use of rupee in invoicing and settlement of international trade.
3. The third proposal seeks to widen the use of balances in Special Rupee Vostro Accounts (SRVAs). These balances, which currently facilitate trade settlement in local currency, will now be made eligible for investment in corporate bonds and commercial papers.
(More to come)
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