“Volumes are not picking up that much, but I think those are teething issues that need to be worked out. The number of countries from which interest is coming is gradually increasing. The number of banks with whom accounts are opened is gradually increasing,” Sankar said while addressing the media after the RBI’s monetary policy review Thursday.
“This is, as all of you would realise, a long-term objective and we have to build towards that. Some transactions have happened. If I may add, we are seeing a lot of official interest in this. Other central banks, other governments (are) taking note of this and trying to talk and find out and explore the opportunities as well,” he said.
On July 11, 2022, the RBI announced additional arrangements for invoicing, payment and settlement of exports and imports in rupees. The broad framework includes the provision for all exports and imports under the arrangement to be denominated and invoiced in the rupee. Settlements of transactions would also take place in rupees, the central bank said.
The RBI took the steps to support the strengthening interest of the global trading community in rupee transactions. The measures were announced at a time when the rupee was witnessing enhanced volatility due to aggressive rate hikes in the US and risk-aversion after the Ukraine war. Moreover, with US sanctions on Russia hampering trade, several countries made efforts to move away from the dominance of the dollar in global trade.
“The stakeholders on either side are getting adjusted to it. It’s completely a new paradigm for stakeholders; for importers, exporters and banks on both sides. Both sides mean India and whichever the country at the other end. It is something we expect will improve steadily,” RBI Governor Shaktikanta Das said on Thursday.
Last month, a government official said that several banks, including HDFC Bank and UCO Bank, had opened as many as 30 special Vostro accounts to facilitate overseas trade in the rupee. According to the Director General of Foreign Trade Santosh Kumar Sarangi, around 18 countries have opened special Vostro accounts with Indian banks.Sberbank and VTB Bank are the first foreign lenders to receive the approval after the RBI announced the guidelines.