In an effort to establish the rupee as a global currency, banks are reportedly considering starting trade with Bangladesh and African nations like Egypt.
The external sector would be protected from exchange market fluctuations by international trading in rupees.
In the most recent fiscal year, India purchased items worth USD 3,520.83 million from Egypt, USD 1,004.24 million from Algeria, and USD 2,725.08 million from Angola.
According to information released by the trade ministry, Bangladesh imported USD 1,977.93 million worth of goods from its neighbouring countries in the previous year.
Currently, Special Rupee Vostro Account facilitates rupee trading between Russia, Mauritius, and Sri Lanka (SRVA).
The rupee trade agreement has already been operationalized thanks to SRVAs created by Indian banks with banks from these three countries.
Recently, an SRVA with State Bank of India was opened by SBI Mauritius Ltd. and People’s Bank of Sri Lanka (SBI). In addition, Bank of Ceylon opened a bank account at Chennai, the location of its Indian affiliate.
While Chennai-based Indian Bank launched special rupee accounts for three Sri Lankan banks, including NDB Bank and Seylan Bank in Colombo, Union Bank of India opened equivalent accounts for Ros Bank Russia.
Indi Following permission from the Reserve Bank of India, 11 banks, including two from Russia and one from Sri Lanka, created a total of 18 such special rupee accounts (RBI). In July, the RBI released comprehensive guidelines for domestic currency cross-border trade operations.
According to reports, the finance ministry encouraged stakeholders to consider more nations and set up this mechanism during a recent review conference with stakeholders as part of its ambitions to increase bilateral trade through SVRAs and internationalise native payment methods.
India has been attempting to encourage rupee commerce in the wake of the Russia-Ukraine war and the Western sanctions.
Since the RBI released the rules in July, two major Russian banks, Sberbank and VTB Bank, are the first international lenders to be approved.
In accordance with the guidelines, the RBI made the decision to implement a new system for rupee-based export/import invoicing, payment, and settlement.
another bank in Russia Additionally, this account has been registered with Kolkata-based UCO Bank by Gazprombank, which does not have a branch in India.
The opening of the special vostro account clears the way for rupee payments to be settled for commerce between India and Russia, facilitating cross-border trade in the Indian rupee, which the RBI is eager to promote.
To spread awareness of the new structure, the RBI has permitted the special vostro accounts to invest the surplus balance in Indian government securities.
According to the RBI, “Indian importers who use this mechanism for imports shall make payment in INR (Indian Rupee) against the invoices for the supply of goods or services from the overseas seller/supplier, which shall be credited into the special vostro account of the correspondent bank of the partner country.”
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