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WHICH COUNTRIES ARE LIKELY TO USE THE NEW MODEL?Įxporters' bodies said RBI's move would help support trade with countries under sanctions, mainly Russia and Iran, and with African and South American countries - and neighbouring Sri Lanka - that have little access to hard currencies. Surplus from vostro accounts could be used to invest in government bonds, and payment for projects and investments, the RBI said. The accounts could then be used to pay Indian exporters in the local currency. Indian importers of goods or commodities such as oil or coal would make payments to these accounts in rupees. Indian banks would need prior approval from the Reserve Bank of India to act as correspondent banks. To settle international trade transactions in rupees, a foreign bank will need to open a vostro account - an account that a correspondent bank holds on behalf of another bank - with an authorised Indian bank. Moscow has been discussing with India, Iran, Egypt and some other countries ways to remove dollars and euros from commercial transactions.įollowing are key facts about India's plans for settlement of international trade in rupees.
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NEW DELHI, July 13 (Reuters) - India's central bank this week introduced a new mechanism for international trade settlements in rupees, aiming to promote exports and facilitate imports.īesides promoting international use of the local currency, many exporters and economists see the measure as a way to promote trade with countries that are under Western sanctions, such as Russia and Iran.
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