Having emerged as the fastest growing major economy in the world, India needs to take calibrated steps to internationalise rupee, said Uday Kotak, Co-Chairs of the India-UK Financial Partnership (IUKFP). “‘Internationalisation of Rupee’ (report) talks about how do you make rupee a more acceptable global currency. There is series of recommendation which include rupee invoicing, rupee deposits and accounts outside India, developing rupee asset market outside India,” he said.
After submitting report to Finance Minister Arun Jaitley and UK Chancellor of the Exchequer Philip Hammond, Kotak said the paper also recognises need to do it gradually rather than rushing through it.
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“The recommendations are not revolutionary approach but evolutionary approach. Step by step as India gets on the firmer footing in the larger scheme of things how does India play on the global stage without exposing itself to issues which could lead to challenges in financial stability,” he said.
Sir Gerry Grimstone Co-Chairs IUKFP said that the issue of secondary trading of masala bonds in India is looked at. The rupee-denominated bonds or masala bonds are instruments through which Indian entities can raise funds by accessing overseas capital markets, while bond investors hold the currency risk.
“At the moment it is cleared through LSE. There was suggestion that secondary trading of these (masala) bonds should be made available in India. That’s one of matters that would be looked at,” Grimstone said.He further said Brexit has no impact on financial institutions and other business but it can affect manufacturing firms.
“Two years from now Britain is going to leave UK…Brexit does not hit Indian industry hugely. It hits Indian manufacturer of course who are manufacturing in the UK exporting overseas but not Indian banks,” he said. Brexit for the financial service partnership is not a huge matter but it is an opportunity because it opens platform for forging Free Trade Agreement (FTA), he added.