- Streamlined Cross-Border Transactions:
- The NRIs are now allowed to open rupee accounts with banks abroad, making current and capital account transactions relatively easier.
- Application of Rupee for Business and Personal Transactions:
- NRI can make use of the rupee proceeds in various transactions like export payments, business dealings, and investments in India.
- Greater Flexibility for NRIs:
- NRIs can retain rupees earned from exports to India and utilize the balance for business payments to Indian residents.
- Increased Ease of Foreign Investment:
- NRIs can invest abroad in rupee-denominated assets, which will increase their investment choices and facilitate repatriation.
- Export-Import Facilities:
- NRIs can retain their rupee accounts for the receipt of export earnings, managing advance remittances, and payment of import bills to India.
Banker’s View: Limited Transactions Anticipated
- Bankers anticipate limited transactions due to the non-convertible status of the rupee.
- The accounts are primarily open for trade transactions in the UAE, Indonesia, and the Maldives, but could eventually extend to all countries.
RBI’s Efforts to Promote Rupee Usage
- In 2023, an RBI committee recommended expanding the use of the rupee in international trade, including inclusion in the IMF’s Special Drawing Rights basket.
- Bilateral and multilateral trade arrangements have been proposed for invoicing, settlement, and payments in INR and local currencies.
Existing Attempts to Rupee Settlement
- July 2022:
- Opening of special rupee Vostro account with AD banks in India, opened the door for rupee settlement in international trade.
