Finance Ministry will meet with stakeholders to make strategy for promoting rupee as a currency of international trade

7 Sep 2022 , 08:04 AM

To examine strategies to encourage cross-border trade in the rupee rather than the US currency, the finance ministry will convene a conference with all stakeholders, including banks and representatives of the external affairs and commerce ministries, on Wednesday.

Representatives of the Reserve Bank of India, IBA, and industry organizations are anticipated to attend the meeting, which will be presided over by financial services secretary Sanjay Malhotra.

According to news reports, banks would be tasked with promoting this by requesting that exporters negotiate rupee trade.

In July, the RBI published thorough circular requesting banks to set up extra provisions for export and import operations in Indian rupees in light of the growing interest in the local currency among the international trade community.

The Reserve Bank of India’s (RBI) decision to permit cross-border rupee trade transactions comes at the right time and is a step toward the currency’s internationalization.

As a result of sanctions put in place by the US and Europe in response to Moscow’s invasion on Ukraine, a significant portion of bilateral trade between India and Russia is being settled in rupees.

The RBI has stated that the concerned banks will need Special Rupee Vostro Accounts of the correspondent bank(s) of the partner trading countries in order to settle trade transactions.

The funds in the designated Special Vostro account will be used to pay exporters who use this system to send products and services overseas in Indian rupees.

The circular states that, subject to a mutual agreement, the maintained rupee surplus balance may be utilized for permitted capital and current account operations.

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