admin The Reserve Bank of India (RBI) has announced a suite of new measures designed to extend the reach of the Indian rupee (INR) into international trade and finance. The central bank hopes these reforms will encourage wider use of the rupee beyond India’s borders, enhancing its standing as a settlement currency in Asia and beyond.
Among the most significant changes, authorised dealer banks will now be empowered to issue rupee-denominated loans to non-resident borrowers in Bhutan, Nepal and Sri Lanka, strictly for trade-related purposes. This aim is to reduce reliance on third-party currencies—particularly the US dollar—for transactions in South Asia, where nearly 90 per cent of India’s exports in 2024–25 were directed. The move underscores India’s view of its own region as the logical first frontier for rupee internationalisation.
Measures to Enhance Transparency and Investor Appeal
To support these ambitions, the RBI also plans to publish transparent reference rates for the currencies of India’s key trading partners—not just major global currencies such as the dollar, euro, yen and sterling. For example, the introduction of formal reference rates for currencies like the Indonesian rupiah or the UAE dirham will ease cross-currency conversions and make rupee invoicing more attractive to importers and exporters.
Another major development concerns Special Rupee Vostro Accounts (SRVAs). Until now, these accounts—maintained by foreign banks with Indian banks—were restricted largely to trade settlements and government securities. Under the revised rules, SRVA balances may be used for investment in corporate bonds and commercial papers. That change is expected to spur demand for rupee-denominated assets, expanding the investment appeal of Indian capital markets to non-resident entities.
Together, these initiatives build on the RBI’s earlier efforts—such as bilateral rupee trade agreements and the promotion of India’s UPI system for cross-border payments. The central bank’s strategy is clearly incremental: first establish the rupee in regional trade, then broaden its footprint globally. While challenges remain, these reforms mark a deliberate step toward strengthening the rupee’s role in the global financial architecture.
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