RBI proposes measures to boost rupee's global presence
What's the story
The Reserve Bank of India (RBI) has announced new measures to promote the use of the Indian rupee (INR) in cross-border transactions. The move is part of a broader strategy to internationalize the currency. The government has been working for months to make the rupee more widely accepted and used in global trade, finance, and investment.
Strategic proposals
AD banks can now lend INR to non-residents
RBI Governor Sanjay Malhotra has proposed three key measures to globalize the rupee. The first is that authorized dealer (AD) banks will now be allowed to lend in INR to non-residents from Bhutan, Nepal, and Sri Lanka for trade-related transactions. This is expected to deepen trade settlement in rupee with these neighboring economies.
Currency stability
Establishing reference rates for major trading partner currencies
The second measure proposed by the RBI is to establish transparent reference rates for currencies of India's major trading partners. This is aimed at making pricing more predictable and strengthening the use of the rupee in invoicing and settlement of international trade. The move comes as part of India's efforts to present the rupee as a stable currency on the global stage.
Investment expansion
Expanding use of Special Rupee Vostro Accounts
The third proposal from the RBI is to expand the use of balances in Special Rupee Vostro Accounts (SRVAs). These balances, which currently facilitate trade settlement in local currency, will now be eligible for investment in corporate bonds and commercial papers. This is a major step toward making the INR more attractive for international investors and businesses.