RBI has recently decided to settle all the arrangements for invoicing, payment, and settlement of exports/imports in INR. This whole settlement is initiated to promote the growth of global trade.
To put this mechanism into action, the Authorized Dealer (AD) banks need to get prior approval from the Foreign Exchange Department of RBI, then the payment can be made in INR, which would be credited into the special Vostro account of the correspondent bank of the partner country against the invoices for the supply of goods from an overseas seller or supplier.
The bank of the partner country needs to present itself to the AD bank in India for opening the INR Vostro account. The AD bank will move the RBI for approval. The AD bank also needs to ensure that the correspondent bank country does not form part of the FATF public statement on high-risk and non-cooperative jurisdiction on which FATF has called for counter-measures.
This new move by the RBI has been welcomed by FIEO (Federation of Indian Exports Organizations). Mr. Dr. A Sakthivel, President of FIEO has said that this move will pave the way for trading and settlement of Exim in INR and this will help our exporters and importers and also recognize our Indian rupee as an international currency.