Indian importers undertaking imports through this mechanism shall make payment in INR, which shall be credited into the Special Vostro Account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller or supplier.For settlement of trade transactions with any country, the authorized dealer bank in India must open Special Rupee Vostro Accounts of the correspondent bank of the partner trading country.SettlementĪs per the RBI notification, the settlement of trade transactions under this arrangement shall take place in Indian Rupee, in accordance with the procedure outlined below. Without mentioning the name of the countries, the RBI has clarified that the exchange rate between the domestic currencies of the two trading partner countries will be market determined. In this new international trading framework, all exports and imports under will be denominated and invoiced in Indian Rupee. What is the framework outlined by the RBI for cross-border trade transactions in the Indian Rupee? Invoicing The new mechanism enabled by the RBI will facilitate importers and exporters to circumvent rules that prevent the use of a global currency, such as the US dollar for trade with certain countries. For instance, following the Russia-Ukraine conflict, several countries had imposed sanctions on Russia, which left Indian companies desperate for alternative modes of payment for imports. This move by the RBI, India’s central bank, comes in the wake of increasing pressure on the Indian currency, following the Russia-Ukraine conflict and sanctions by the US and the European Union (EU) on certain countries. How we can help companies leverage growth in the trade and e-commerce industry.

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