On Wednesday, the Reserve Bank and the Finance Ministry invited bank executives and representatives of trade associations to promote rupee-based export and import operations.
Sources added that during the conference, it was emphasized that banks should interact with their international counterparts to create special rupee vastro accounts to allow cross-border trading in Indian currency rather than the more common manner of the dollar.
According to the sources, trade groups and their international trading partners should look into ways to apply the framework. Officials from the external affairs and commerce ministries and the Indian Banks' Association participated in the conference, which urged embassies abroad to promote the system through diplomatic channels.
Several nations, including Argentina, Zimbabwe, and Sri Lanka, are reportedly interested in settling bilateral trade in rupee. In light of the growing interest in the home currency among the international trade community, the RBI issued a comprehensive circular in July requesting banks to set up extra provisions for export and import operations in Indian rupees.
An important step toward the internationalization of the rupee was taken with the Reserve Bank of India's (RBI) declaration that cross-border commercial transactions would be permitted in that currency.
A significant portion of bilateral trade between India and Russia is being settled in rupees due to sanctions put in place by the US and Europe in response to Moscow's invasion of Ukraine.
To settle trade transactions, the concerned banks would need unique rupee Vostro accounts of correspondent banks from the trading partner countries, according to the RBI.
"Indian importers who use this mechanism for imports 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," the previous statement reads.
Exporters who use this method to ship goods abroad will be paid Indian rupees using the monies in the designated special Vostro account. According to the circular, provided all parties agree, the maintained rupee excess balance may be utilized for permitted capital and current account operations.
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