India has long sought to make the rupee a worldwide reserve currency. As part of its efforts, the Indian government is now urging countries experiencing a dollar shortage to settle trade payments in Indian rupees. As many as 18 countries have already agreed to trade in Indian currency.
Sunil Barthwal, India’s Commerce Secretary, recently stated that India is willing to trade in Indian rupees with countries who are “suffering currency failure or have a dollar shortage.” After the release of the Foreign Trade Policy 2023, which aims to grow India’s exports to USD 2 trillion by 2030, the secretary stated on Friday that the government is focusing on improving the rupee payment system.
India has a system in place to settle trade deals in rupees with up to 18 nations using 30 special rupee vostro accounts. The RBI has also permitted various Indian banks, notably HDFC Bank and UCO Bank, to establish special rupee vostro accounts with 30 overseas banks in order to facilitate rupee commerce.
The Ministry of Foreign Affairs (MEA) stated on Saturday that India and Malaysia have signed a milestone deal that will allow the two countries to settle commerce in Indian rupees.
Meanwhile, adjustments to the FTP have been made to facilitate international trade settlement in Indian rupees, with the goal of making INR a worldwide currency.
The government has invited trade organizations and banks to look into opportunities to trade in rupees with other countries. Since then, Indian banks have opened special rupee vostro accounts with banks from throughout the world, putting the rupee trade arrangement into action.
Sberbank of Russia and VTB Bank of Russia were the first foreign lenders to gain authorization after the RBI released the guidelines for rupee offshore trading in July of last year.
Gazprom, a Russian bank with no presence in India, has also opened an account with Kolkata-based UCO Bank.
The decision to open the special vostro account cleared the way for rupee payments to be settled for commerce between India and Russia, allowing for cross-border trading in the Indian currency. To help popularize the new structure, the RBI has also authorized the special vostro accounts to invest the surplus balance in Indian government securities.
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