International Trade Settlement in Indian Rupees – Feedback sought

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January 12, 2023

Members of the Council,

Dear Sir,

As you are kindly aware the Reserve Bank of India had issued a circular No.10 dated on International Trade Settlement for exports/ imports in Indian rupees.

In this regard, the Department of Commerce has requested details of transaction which have happened under Rupee Trade Mechanism.

We would hence request you to kindly send details of Rupees transactions done through Special Vostro Accounts for export/import by January 13, 2023 in the following format.

Name of the Company
Details of exports/ imports made in Rupee Transaction
Export Import
Shipping Bill No. Amount in Rs. Bill of Entry No. Amount in Rs.

Thanks & regards,

Executive Director


December 16, 2022

Members of the Council,

Sub : International Trade Settlement in Indian Rupees

Dear Sir,

We would like to invite your kind attention to our earlier circulars dated 15.7.22 & 21.11.22 on the above subject, wherein we informed the following.

·         Reserve Bank of India, vide circular No. 10 dated July 11, 2022 (copy enclosed) has notified the mechanism on International Trade Settlement in Indian Rupees

·         The DGFT has issued the Public Notice No. 35/2015-20 dated 09.11.2022 and Notification No. 43/2015-2020 dated 09.11.2022 (copy enclosed), stating that amendments are made in Foreign Trade Policy to permit exports benefits / fulfillment of Export Obligations for Invoicing, payment and settlement of exports and import in Indian Rupees, as per aforementioned RBI’s A.P. (DIR Series) Circular No. 10 dated 11th July, 2022

We would like to inform that a meeting was held recently under the Chairmanship of Secretary, Department of Financial Services, Government of India to discuss International Trade Settlement in Indian Rupees. The following issues were clarified in the meeting.

a) It was emphasized that the mechanism put in place by RBI is all-encompassing in terms of being applicable for every item, every bank, any every country. There were no restrictions on the range of type of products/goods/items allowed for import/export under the said mechanism. Further, this arrangement is country agnostic, i.e., it is uniformly applicable for banks of any partner country seeking to undertake trade with India in INR, and there is no restriction on this count.

b) Prior approval from RBI is required at the time of opening of Special Rupee Vostro Accounts (SRVAs) by Indian AD Banks for various foreign banks.

c)      The mechanism in no way hinders the use of other channels of trade settlement in other convertible currencies etc, i.e, other modes of settlement will continue to be available alongside this mechanism. There are no restrictions which bind any trader from using other available channels/models while also using this mechanism.

d)     Regarding foreign currency treatment (e.g. liability in pre-shipment finance), since the SRVA balance is a repatriable balance, foreign currency liability can be set off against the balance received by the exporters against the pre-shipment.

e)     SRVAs, as the name implies are Special Vostro accounts, and all Regulations/ Guidelines/enablement which exist for normal Vostro accounts also apply to SRV Accounts. Therefore as regards funding of SRVAs, it follows the same principles as normal Vostro accounts, i.e., if INR balances are required to fund SRVAs for exports, then the same can be purchased using foreign currency as in normal Vostro accounts. As such, there is no restriction regarding prior imports/ sequencing of imports first so as to carry out any exports using SRVAs.

f)       There is no regulatory requirement that traders need to have/open accounts with the banks settling the trade using SRVAs. Thus, banks may not insist on traders opening accounts with them for enabling use of SRVAs by them.

g)      Currency conversion charges should not be mistaken as premium/commission. These are transaction charges which would also form a part of currency conversion costs otherwise also (i.e., in other channels of currency conversion). As far as bilateral currency conversion is concerned, market depth will only come with time as the currency pairs gain demand.

h)     One major issue was regarding the percolation of know-how/information among bank staff regarding usage of this mechanism. It was urged that all banks may designate nodal officers, who could act as single points of contact and points of referral for any traders wishing to utilize this mechanism.

Members may please note the above and approach your bank for further details on International Trade Settlement in Indian Rupees.

An FAQ on International Trade Settlement in Indian Rupee posted in the RBI website is also enclosed herewith for reference.

Thanks & regards,

Executive Director


Notification 43 dt 09-11-22 Eng

PN 35 dt 09-11-22 Eng

FAQ on trade settlement in Indian rupees