Talking about the documentation, the central bank said that the export and imports undertaken and settled in this manner will be subject to usual documentation and reporting requirements
In order to promote the growth of global trade with emphasis on exports from India, the Reserve Bank of India (RBI) on Monday decided to put in place an additional arrangement for invoicing, payment and settlement of exports and imports in the Indian rupee. All exports and imports under this arrangement may be denominated and invoiced in Rupee. The exchange rate between the currencies of the two trading partner countries may be market-determined, the central bank said.
In terms of regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016, AD banks in India have been permitted to open Rupee Vostro Accounts, RBI said. Accordingly, for settlement of trade transactions with any country, AD banks in India may open special rupee Vostro accounts of correspondent bank/s of the partner trading country.
In order to allow settlement of international trade transactions through this arrangement, Indian importers undertaking imports through this mechanism shall make payment in INR which shall be credited into the special Vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller, supplier. “Indian exporters, undertaking exports of goods and services through this mechanism, shall be paid the export proceeds in INR from the balances in the designated Special Vostro account of the correspondent bank of the partner country,” RBI added.
Talking about the documentation, the central bank said that the export, imports undertaken and settled in this manner will be subject to usual documentation and reporting requirements. The instructions shall come into force with immediate effect. AD banks may bring the contents of this circular to the notice of their constituents and customers concerned, it said