The Reserve Bank of India (RBI) has allowed trade settlements between India and other countries, including Sri Lanka and Russia, in rupees, in order to promote the growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in INR.
“In order to promote the growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in INR, it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in INR,” the RBI said. The exchange rate between the currencies of the two trading partner countries may be market-determined, it added.
Banks in India are permitted to open Vostro accounts in rupees (Vostro accounts are arrangements between banks across geographies). The RBI said banks in India might open special rupee Vostro accounts of correspondent bank/s of the partner-country in trading, for settling trade transactions with any country.
According to the Sri Lankan High Commission, in 2020 India was Sri Lanka’s second-largest trading partner with bilateral merchandise trade amounting to around $3.6 billion. The RBI has said Indian exporters may receive advance payment in rupees through this mechanism.
