Mumbai, July 11 (FN Agency) The Reserve Bank of India (RBI) on Monday introduced international trade settlement mechanism in Indian rupee (INR) to promote exports from the country and support the increasing interest of the global trading community in Indian currency. “In order to promote growth of global trade with emphasis on exports from India and to support the increasing interest of global trading community in INR, it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in INR,” the RBI said. Under the new trade settlement mechanism banks would require prior approval from the Foreign Exchange Department of the RBI.
“Before putting in place this mechanism, AD banks shall require prior approval from the Foreign Exchange Department of Reserve Bank of India, Central Office at Mumbai,” the central bank said. The new arrangement comes into force with immediate effect. Commenting on the RBI’s decision, EEPC India Chairman Mahesh Desai said that the move would facilitate trade with countries under sanction like Iran and Russia. “Ever since sanctions were imposed on Russia trade has been virtually at standstill with the country due to payment problems. As a result of the trade facilitation mechanism introduced by the RBI we see the payment issues with Russia easing,” Mr Desai said. “The move would also reduce the risk of forex fluctuation especially looking at the Euro-Rupee parity. We see this as a first step towards 100% convertibility of Rupee,” he added.