The commerce ministry on Friday notified its decision to allow invoicing, payment and settlement of external trade in rupees.
The move was required to align the foreign trade policy of the government with the July announcement of the Reserve Bank of India (RBI) and facilitate rupee trade.
The RBI had, in July, notified the new mechanism to settle international trade in rupees to reduce the depreciation of the domestic currency against the dollar.
On Tuesday, finance minister Nirmala Sitharaman said many countries have now expressed interest for settling bilateral trade with India in rupees.
On Friday, the directorate general of foreign trade, under the commerce ministry, said its notification will permit “invoicing, payment and settlement of exports and imports in the rupee in sync with RBI’s …circular” and that it will come into effect immediately.
The settlement of trade transactions in the rupee may also take place through special rupee vostro accounts opened by authorised dealer banks in India, it said.
According to the notification, domestic firms undertaking imports through this mechanism will make payment in the rupee, which will be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller/supplier.
“Indian exporters undertaking exports of goods and services through this mechanism shall be paid the export proceeds in INR from the balances in the designated special vostro account of the correspondent bank of the partner country,” it added.
State Bank of India on Thursday said that it is opening special rupee vostro account to handle Russia-related trade settlements but is not the “nodal bank” for such business.
In an interview to FE, Punjab National Bank managing director AK Goel said: We are exploring with some of the banks for opening of special rupee vostro accounts. Some of our exporter/importer clients have also approached us and shown interest towards the trade settlement in the rupee.”