As per the recent reports, it claims that the Reserve Bank requested banks to make additional provisions for export and import operations in Indian rupees on Monday in light of the growing interest in the local currency among the world’s traders. Banks will need prior approval from the Reserve Bank of India’s (RBI) Foreign Exchange Department before using this method, the central bank stated in a circular.
It has been decided to implement an additional arrangement for invoicing, payment, and settlement of exports/imports in INR to encourage the expansion of international trade with a focus on exports from India and to support the growing interest of the international trading community in INR. The involved banks will need Special Rupee Vostro Accounts of the correspondent bank(s) of the trading partner countries to settle trade transactions.
We also came to know that the Indian importers who use this method of importation must pay INR against the invoices for the supply of goods or services from the foreign seller or supplier, and this payment must be credited to the Special Vostro account of the correspondent bank of the partner nation. The funds in the designated Special Vostro account will be used to pay exporters who use this system to send products and services overseas in Indian rupees. Through this arrangement, Indian exporters might be able to get rupee-based advance payments from foreign importers against their products.
Furthermore, The circular states that the maintained rupee surplus balance may be applied to mutually agreed-upon authorized capital and current account operations. The remaining funds in special Vostro accounts can be used to fund investments, manage export/import advance flows, and purchase government bonds.
