Move Cones At a time when ₹ Touches all the time Low
The Reserve Bank of India (RBI ) on Thursday announced liberalised norms to encourage use of Indian rupee and local/national currencies to settle cross border transaction .
The decision comes at a time when the domestic curency is sliding and touches an all time low of 87.70per US dollar on Monday .
The Reserve Bank has already signed Memorandum of understanding (MOU) with central banks of the United Arab Emirates, Indonesia and Maldives to encourage cross border transactions in local currencies including Indian rupee.
To encourage greater use of Indian rupee (INR)for trade transactions ,in July 2022, an additional arrangement in the form of special Rupee vostro account (SRVA) was introduced.
several foreign banks have since open SRVA’s with banks of India “overseas branches of Authorised Dealer banks will able to open INR accounts for s person resident outside India for a settlement of all permisible current account and capital account transactions with a person resident in India ,“the RBI on Thursdays said , while announcing the changes made in the extant Fema regulations.
Under the liberalised FEMA regulation , persons residence outside India will be able to settle bona fide transaction with other non- residents using the balance in their repatriable INR accounts such as special
Non – resident Rupee account and SRAV. Also , persons resident outside India will able to use their balance held in repatriable INR account for foreign investment ,including FDI ,in non – debt instruments.
RBI further said Indian exporters will be able to open account in any foreign curreny overseas for settlement of trade transaction, including receiving exports proceeds and using these proceed to pay for imports .
the decision on promotion of cross border transaction in INR and local/ national currency flows s review of the Fema regulation of 1999 under taken by the Reserve Bank in consultation with the central govt.