The finance ministry will on Wednesday hold a meeting with all stakeholders, including banks and officials of external affairs and commerce ministries, to discuss ways to promote cross-border trade in rupee instead of US dollar. The meeting, to be chaired by financial services secretary Sanjay Malhotra, is expected to see attendance from representatives of the Reserve Bank of India, IBA and industry bodies.
Banks would be asked to promote this by asking exporters to negotiate on rupee trade, sources said. RBI in July issued a detailed circular asking banks to put in place additional arrangements for export and import transactions in Indian rupees in view of increasing interest of the global trading community in the domestic currency.
The announcement by the Reserve Bank of India (RBI) to allow cross-border trade transactions in rupee is a timely move and a step towards internationalisation of the currency. Currently, a large part of bilateral trade between India and Russia is getting settled in rupee due to sanctions imposed by the US and Europe following Moscow's attack on Ukraine.
The RBI had said for settlement of trade transactions, the concerned banks will require Special Rupee Vostro Accounts of correspondent bank/s of the partner trading country. "Indian importers undertaking imports through this mechanism 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," it had said.
Exporters, undertaking overseas shipments of goods and services through this mechanism, will be paid the export proceeds in Indian rupees from the balances in the designated Special Vostro account. As per the circular, the rupee surplus balance held can be used for permissible capital and current account transactions in accordance with the mutual agreement.