MANU/APDR/0017/2022
Ministry : Reserve Bank of India
Department/Board : Financial Markets Regulation Department
Circular No. : A. P. (DIR Series) Circular No. 10
RBI/2022-2023/90
Date : 11.07.2022
To
All Category-I Authorised Dealer Banks
Madam/Sir
International Trade Settlement in Indian Rupees
1. In order to promote growth of global trade with emphasis on exports from India and to support the increasing interest of global trading community in INR, it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports / imports in INR. Before putting in place this mechanism, AD banks shall require prior approval from the Foreign Exchange Department of Reserve Bank of India, Central Office at Mumbai.
2. The broad framework for cross border trade transactions in INR under Foreign Exchange Management Act, 1999 (FEMA) is as delineated below:
a. Invoicing: All exports and imports under this arrangement may be denominated and invoiced in Rupee (INR).
b. Exchange Rate: Exchange rate between the currencies of the two trading partner countries may be market determined.
c. Settlement: The settlement of trade transactions under this arrangement shall take place in INR in accordance with the procedure laid down in Para 3 of this circular.
3. 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 may open Special Rupee Vostro Accounts of correspondent bank/s of the partner trading country. In order to allow settlement of international trade transactions through this arrangement, it has been decided that: