RBI Introduces INR Settlement for International Trade: AD Banks to Open Special Rupee Vostro Accounts for Partner Countries.

The circular issued by the Reserve Bank of India (RBI) introduces a mechanism for settling international trade transactions in Indian Rupees (INR) to enhance global trade and support exports from India. Authorized Dealer (AD) banks must obtain prior approval from the RBI to implement this system, which involves invoicing, payment, and settlement in INR. The framework allows AD banks in India to open Special Rupee Vostro Accounts for correspondent banks of partner countries, facilitating payments for imports and exports. The circular also outlines documentation, advance payments, set-off of receivables, bank guarantees, use of surplus balances, and reporting requirements under the Foreign Exchange Management Act (FEMA), 1999.

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