Context:
The Reserve Bank of India (RBI) recently introduced measures to simplify foreign exchange management and promote the use of the Indian Rupee (INR) in international trade, targeting exporters, importers, and merchant traders.
Key Measures:
- Reconciliation and Closure in EDPMS/IDPMS:
- AP (DIR Series) Circular No. 12, Oct 1, 2025 allows Authorised Dealer (AD) banks to reconcile and close entries in the Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS) for bills valued ≤ ₹10 lakh.
- Closure can be based on a declaration from exporter/importer confirming realisation/payment.
- Quarterly consolidated submissions are permitted for bulk reconciliation.
- Helps address cases where payments are received/made through different AD banks or third parties.
- Flexibility in Merchanting Trade Transactions (MTT):
- Earlier: Entire transaction to be completed within 9 months, with foreign exchange outlay capped at 4 months.
- New: Foreign exchange outlay extended to 6 months, giving merchant traders additional operational flexibility.
- Special Rupee Vostro Accounts (SRVA) Investment Expansion:
- Previously: Surplus INR balances could be invested only in government securities.
- Now: Can also be invested in non-convertible debentures, bonds, and commercial papers of Indian companies, within prescribed limits.
- Impact: Broadens investment options for countries settling trade in INR.
Merchanting Trade Transactions (MTT) and Special Rupee Vostro Accounts (SRVA) updates by RBI (2025):
| Aspect | MTT (Merchanting Trade Transactions) | SRVA (Special Rupee Vostro Accounts) |
|---|---|---|
| Definition | International trade where an Indian merchant buys goods from one foreign country and sells to another, without goods entering India physically. | Accounts held by foreign partner banks in India in INR, used to settle trade in Indian Rupees. |
| Earlier Rule | – Transaction had to be completed within 9 months. – Foreign exchange outlay restricted to 4 months. | – Surplus balances could only be invested in government treasury bills or securities. |
| RBI 2025 Update | – Foreign exchange outlay extended to 6 months, giving more operational flexibility for merchant traders. | – Surplus balances can now also be invested in: • Non-convertible debentures (NCDs) • Corporate bonds • Commercial papers of Indian companies- Must follow existing investment guidelines and limits. |
