In order to promote the settlement of cross border transactions in Indian Rupees and local currencies, the Reserve Bank has announced a few additional measures.
In the ‘Statement on Developmental and Regulatory Policies’ issued earlier today, RBI has said that it is essential to make availability and accessibility of Indian rupees to residents of other countries. Accordingly, RBI has decided to allow banks in India and their overseas branches to lend money in Indian Rupees to residents of Bhutan, Nepal and Sri Lanka. Detailed guidelines in this regard will be issued shortly.
RBI has further proposed to include currencies of India’s major trading partners in the list of reference rates published by Financial Benchmarks India Limited – FBIL. This is expected to further deepen the onshore forex market and encourage banks to quote directly in a larger set of currency pairs, thus eliminating the need for multiple currency conversions and making trade more efficient. Currently, FBIL publishes rates for dollar(USD), Euro (EUR), Pound (GBP) and Japanese Yen (JPY) against INR.
In order to widen the scope of Special Rupee Vostro Accounts, RBI has further decided to allow investment of balance money from these accounts in corporate bonds and commercial papers. The revised regulations will be notified shortly.
