India has been making efforts to make the rupee a global reserve currency for a long time. As part of the efforts, the Government of India is now prompting countries facing dollar shortage to settle their trade payments in Indian Rupees.
Recently, Commerce Secretary Sunil Barthwal said that India is ready to trade in Indian rupee with countries that are “facing currency failure or dollar shortage”. Speaking after the unveiling of the Foreign Trade Policy (FTP) 2023, which seeks to increase India’s exports to USD 2 trillion by 2030, the secretary on Friday said the government is focusing on strengthening the rupee payment system. Is.
India has arrangements with 18 countries to settle trade deals in rupees through 30 special rupee vostro accounts. The Reserve Bank of India has permitted several Indian banks, including HDFC Bank and UCO Bank, to tie-up special Rupee vostro accounts with 30 foreign banks to facilitate foreign trade in Rupee.
Meanwhile, changes have been made in FTP to allow international trade settlement in Indian Rupee with a view to make INR a global currency.
The government had asked trade bodies and banks to explore opportunities for doing business in rupee with more countries. At the direction of the government, Indian banks have since opened special Rupee Vostro accounts with banks in several countries operating Rupee trading arrangements.
Russia’s Sberbank and VTB Bank were the two first foreign lenders to receive the approval after the Reserve Bank of India announced guidelines on foreign trade in rupees in July last year.
Another Russian bank Gazprom, which does not have a unit in India, has also opened this account with Kolkata-based UCO Bank.
The move to open a special vostro account cleared the decks for settlement of payments in rupees for trade between India and Russia, enabling cross-border trade in Indian currency. The Reserve Bank of India has also permitted special Vostro accounts to invest surplus balances in Government of India securities to help popularize the new system.