RBI Grade BNABARD ESISEBI
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Context:
“RBI MPC Unpacked: Key Theory Meets Today’s Macro Trends”Tap to play · from the C4S channel
Reserve Bank of India (RBI) amended the Foreign Exchange Management Act (FEMA) of 1999 to allow overseas branches of authorized dealer banks to open INR accounts for non-residents. This has been done with an aim of promoting the usage of the Indian rupee for cross-border transactions.
- What does it change?
- Overseas branches of authorized dealer banks can open INR accounts for non-residents.
- Non-residents can use their INR account balances to settle transactions with other non-residents.
- Non-residents can use their INR account balances for foreign investments, including FDI.
- Indian exporters can open accounts in foreign currencies overseas to settle trade transactions.
- What are the benefits?
- These changes will facilitate cross-border transactions in rupees.
- These changes will encourage the use of local currencies for cross-border transactions.
- All this will facilitate use of the Indian rupee in global trade.
- Non-Resident Transactions:
- Settlement of the transactions between Non-Residents, through balances held in repatriable INR accounts.
- Investment Support:
- Balances held in repatriable INR accounts can be used for foreign investment.
- Exporter Support:
- Indian exporters can open overseas accounts in foreign currencies to settle trade transactions.
- Implications:
- Strengthening the role of the Rupee, facilitating trade transactions, and economic resilience.
