PXL/HO/Cir-033/2022-23                                                                    Date:  12.07.2022

Hyderabad

Dear Sir / Madam,

Subject: RBI Issues Circular to AD Banks on "International Trade Settlement in Indian Rupees (INR)"

We would like to inform member companies that the Reserve Bank of India (RBI) with a view to promote the growth of global trade with emphasis on exports from India and to support the increasing interest in INR, The Reserve Bank of India, issued a circular to Authorized Dealer Banks (AD Banks) for an additional arrangement for invoicing, payment, and settlement of exports/imports in INR.

The Circular is addressed to the AD Banks and can be referred by the exporters/importers from the link below: https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12358&Mode=0

Following are some of key points from the circular:

1. AD banks shall require prior approval from the Foreign Exchange Department of Reserve Bank of India, Central Office at Mumbai.

2.   All exports and imports under this arrangement may be denominated and invoiced in Rupee (INR).

3.   Exchange rate between the currencies of the two trading partner countries may be market-determined.

4.   AD bank in India may open Special Rupee Vostro Accounts of correspondent bank/s of the partner trading country.

5.   The export/import undertaken and settled in this manner shall be subject to usual documentation and reporting requirements.

6. ‘Set-off’ of export receivables against import payables in respect of the same overseas buyer and supplier with facility to make/receive payment of the balance of export receivables/import payables, if any, through the Rupee Payment Mechanism may be allowed, subject to the conditions.

7.    Issue of Bank Guarantee for trade transactions, undertaken through this arrangement, is permitted subject to adherence to provisions of FEMA Notification.

8.  Reporting of cross-border transactions need to be done in terms of the extant guidelines under FEMA 1999.

9.   The bank of a partner country may approach an AD bank in India for opening of Special INR VOSTRO account. The AD bank will seek approval from the Reserve Bank with details of the arrangement.

10.  Countries or jurisdictions in the updated FATF Public Statement on High Risk & Non-Co-operative Jurisdictions on which FATF has called for countermeasures are not allowed under the arranged and AD Bank has to take note of the same.

Please visit the RBI website for more information or click the following link: Click here

With regards,

Udaya Bhaskar
Director General