Circular No.ES/60/2022-23 12th July, 2022
To: Members of the Council
Sub: RBI allows International Trade Settlement in Indian Rupees (INR)
We would like to inform you that the Reserve Bank of India (RBI) has issued Notification No. RBI/2022-2023/90 dated 11th July, 2022 informing about the settlement of International Trade in Indian Rupees (INR).
RBI has made an additional arrangement for invoicing, payment, and settlement of exports / imports in INR. Before putting in place this mechanism, Authorised Dealer (AD) banks shall require prior approval from the Foreign Exchange Department of RBI, Central Office at Mumbai.
The broad framework for cross border trade transactions in INR under FEMA, 1999 is as delineated below:
In terms of Regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016, AD banks in India have been permitted to open Rupee Vostro Accounts. Accordingly, for settlement of trade transactions with any country, AD bank in India will open Special Rupee Vostro Accounts of correspondent bank/s of the partner trading country.
To allow settlement of international trade transactions through this arrangement, it has been decided that:
Please note that the instructions of RBI shall come into force with immediate effect.
Members may kindly make a note of the above.
S. BALARAJU EXECUTIVE DIRECTOR