Many countries are working to reduce their dependence on the dollar in world trade. Accordingly, the possibility of the Indian rupee becoming an international currency is increasing. Many countries have expressed interest in quoting international trade in Indian rupees and using its process.
According to records, India’s Union Finance Minister Bhagwat Karat told Parliament that India’s central bank, the RBI—has approved the opening of special Rupee Vostro accounts for payments in Indian rupees at 60 banks in 18 countries, including Russia and Sri Lanka, before becoming an international currency.
He also said that among the 18 countries that want to withdraw from dollarization, mainly Russia is showing more interest in improving local currency trade. If export-import is done through rupee exchange, it is likely to bring more profit to India. The minister also said that it will help increase exports.
18 countries that have agreed to trade in Indian Rupees:
What is Special Rupee Vostro Account or SRVA?
The process of SRVAs began in July last year when the RBI issued detailed guidelines on cross-border trade transactions in Indian Rupee (INR). Accordingly during trading, authorized banks in India should open SRVAs of banks in the partner trading country.
These accounts hold the amount held by the foreign company in an Indian bank in Indian Rupees. When an Indian importer pays a foreign trader in rupees, the amount is credited to this Vostro account.
Similarly, when an Indian exporter is required to pay for goods and services in rupees, the amount is deducted from this Vostro account and credited to the exporter’s regular account.
SRVAs holders are allowed to invest their surplus balance in Indian government securities to popularize the new Hindu rupee usage arrangement. This will keep their money safe and increase the value of government roles. In addition, the central bank said that traders are interested in doing business using the rupee.
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India has been trying to promote the use of the INR for trade settlement with other countries after Western and European countries imposed sanctions following Russian President Vladimir Putin’s “special military action” against Ukraine on February 24, 2022.
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