The Reserve Bank of India (RBI) on Wednesday unveiled fresh steps to internationalise the Indian Rupee.
RBI Governor Sanjay Malhotra said India is steadily progressing in making the rupee widely usable in global transactions.
Authorised Dealer banks and their overseas branches can now lend in INR to residents of Bhutan, Nepal, and Sri Lanka. This move aims to ease cross-border trade, offering INR liquidity and wider access in neighbouring countries’ financial systems.
The RBI will soon amend regulations under the Foreign Exchange Management Act to facilitate these new lending permissions.
Officials noted these measures help promote invoicing, payments, and settlements in INR and partner-country local currencies.
To support forex market development, RBI will expand reference rates published by Financial Benchmarks India Limited (FBIL). Currently, FBIL releases rates for USD, EUR, GBP, and JPY, which help determine settlements in forex and derivatives markets.
RBI now proposes including currencies of key Indian trading partners to simplify and strengthen cross-currency transactions. This move encourages banks to quote directly in more currency pairs, reducing conversion steps and boosting trade efficiency.
Additionally, RBI is widening investment options for Special Rupee Vostro Account (SRVA) holders from other countries.
Introduced in 2022, SRVA enables invoicing and settlement of international trade in rupees, reducing dollar dependence.
Previously, holders of SRVA accounts could invest surplus rupee balances only in Indian government securities or T-bills.
Now, the RBI will also permit investments in Indian corporate bonds and commercial papers for greater investment flexibility.
These expanded options are expected to attract wider participation and increase the global utility of the Indian rupee.
The revised rules for SRVA and forex reference rates will be notified shortly, the central bank confirmed in its statement. These initiatives form part of India’s larger strategy to position the rupee as a strong, stable international trade currency.
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