Rupee Internationalisation: India’s Gradual Push in Trade
Why in the news
A report described India’s slow but deliberate effort to widen the rupee’s role in cross-border trade and finance. Officials treat today’s modest numbers as an early stage of a very long journey.
Key facts
- The RBI now monitors the share of trade that is invoiced and settled in rupees; about 5% of foreign trade uses the rupee.
- Agreements with the UAE, Indonesia, Maldives and Mauritius allow trade to be settled in local currencies.
- Settlement runs through Special Rupee Vostro Accounts (SRVAs); 83 banks from 35 nations have opened them in India.
- Non-resident Indians may hold rupee accounts overseas; NRIs in Nepal, Bhutan and Sri Lanka can borrow rupees from overseas branches of Indian banks.
- Indian government bonds are being included in large emerging-market indices.
Why India wants it
- Less reliance on the dollar system; sanctions after the Russia-Ukraine war showed the risk of losing SWIFT access.
- Lower currency risk for exporters.
- Greater economic sovereignty.
Concerns
- Higher exchange-rate volatility.
- Strain on foreign exchange reserves.
- Weaker control over monetary policy.
Exam angle
- Account type used for rupee settlement: Special Rupee Vostro Account.
- Number of banks and countries with SRVAs: 83 and 35.
- Regulator tracking rupee invoicing: Reserve Bank of India.