INDIA: Central Bank Allows International Trade Settlements in Indian Rupees

On 11 July 2022, The Reserve Bank of India (RBI) announced in RBI/2022-2023/90 A.P. (DIR Series) Circular No.10 that Indian rupees can now be used for international trade settlements. Import and export transactions were previously in foreign currency, except for transactions with Nepal and Bhutan which could be in rupees.

According to the circular, Special Rupee Vostro accounts of correspondent banks of the partner trading country can be opened in India for settling trade transactions. Indian importers can pay rupees into the Special Vostro account for imported goods and exporters will be paid in rupees from the balance. The arrangement will also allow Indian exporters to receive advance payment in rupees against exports from importers abroad. Issuing bank guarantees for trade transactions will also be permitted. Import and export transactions settled through rupee Vostro accounts are still subject to the usual reporting and documentation requirements.