RBI has allowed trade settlements between India and other countries in rupees. This will promote the growth of global trade emphasis on exports from India and to support the interest of global trading in INR.
All exports and imports may be denominated, invoiced in rupees. Banks may have to take approvals for making such transactions. The exchange rate between the trading partner countries may be market determined.
Banks in India are permitted to open Vostro accounts in rupees. Vostro accounts are arrangements between banks across geographies.
The importers in India trading through this mechanism shall make payment in INR which will be credited into these special vostro account of the correspondent bank of the partner country.
The exporters should be paid in rupees from the balance of correspondent vostro account of the partner country.
This move can facilitate easier trade with Srilanka and Russia
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