Trade Settlement In INR Via Vostro

The Reserve Bank of India (RBI) has released a notification pertaining to International Trade Settlement in Indian rupees this month. This will allow Indian industries to invoice, make payments, and settle exports/imports in INR. RBI stated that the move is meant to provide a fillip to growth of global trade with emphasis on exports from India and also to support the increasing interest of global trading community in rupees. As per the newly notified system, foreign banks would be required to open 'Rupee Vostro' accounts in Indian banks as the foreign banks can't deal in INR outside of Indian banks. Once these Rupee Vostro accounts are created by foreign banks through an Indian correspondent bank, these accounts can be used to not only invoice trades in INR but also settle international trade transactions directly in INR.