The Reserve Bank of India (RBI) will soon issue guidelines for documentation to banks to iron out the difficulties faced by businesses to conduct trade in local currency with other countries, a senior official said on Friday.
“There were some initial teething troubles with regard to the rupee trading mechanism, but in many of these areas, the transactions have started happening. Some exporters had approached us regarding the problems faced in documentation and we had taken up the issue with the Reserve Bank of India,” the official said.
“The RBI is in the process of issuing a liberal Standard Operating Procedure (SOP) to all the banks so that e-BRC (electronic bank realisation certificate) becomes smooth. The SOP is expected in the next 2-3 days,” he added.
However, the official said that the limitation with rupee trade is that it can only work as a barter currency. “It (rupee) is not an international currency. Whenever we are undertaking rupee trade the trade has to balance.”
Due to trade in the defence sector, Russia has accumulated a lot of rupee reserves.
“There are issues related to rupee trade although India has given offers to all countries which are facing currency crisis or sanctions.”
He, however, did not give any figures on how much of India’s international trade is happening in rupees.
The RBI, in July 2022, allowed invoicing and payments for international trade in Indian rupees and since then it has allowed banks from 18 countries to open Special Vostro Accounts for settlement for that purpose.
India is also negotiating with its key trade partners like UAE to shift part of the bilateral trade to local currencies.