RBI Boosts Indian Rupee in Cross-Border Trade Initiative

The Reserve Bank of India (RBI) has rolled out a series of strategic measures aimed at enhancing the use of the Indian Rupee (INR) for cross-border settlements. This initiative permits banks to extend loans in INR to non-residents from Bhutan, Nepal, and Sri Lanka, reinforcing bilateral trade in domestic currency.

Emphasizing the steady progress India is making in Rupee-based international trade, RBI Governor Sanjay Malhotra highlighted the authorization given to banks for INR lending to specific neighboring countries. Furthermore, the proposal to establish transparent currency reference rates is set to ease INR transactions.

To further promote the Rupee's use, the RBI has allowed broader utilization of Special Rupee Vostro Account balances, making them investible in corporate bonds and commercial papers. These measures aim to diminish US dollar dependency and provide a buffer against exchange rate volatility, thus stabilizing India's economic environment.