Mumbai, July 12 (KNN) The Reserve Bank of India (RBI) on Monday released a framework for international trade settlement in Indian Rupees (INR).

The move aims to promote growth of global trade with emphasis on exports from India and to support the increasing interest of global trading community in INR.

All exports and imports under the new arrangement can be denominated and invoiced in Indian rupee, the exchange rate between currencies under the new arrangement may be market-determined.

It has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports / imports in INR. Before putting in place this mechanism, AD banks shall require prior approval from the Foreign Exchange Department of RBI, Central Office at Mumbai, said the note.

Indian exporters may receive advance payment against exports from overseas importers in Indian rupees through the above Rupee Payment Mechanism.

Set-off of export receivables against import payables in respect of the same overseas buyer and supplier with the facility to make/receive payment of the balance of export receivables/import payables, if any, through the rupee payment mechanism may be allowed, said RBI.

The apex bank said the rupee surplus balance held may be used for permissible capital and current account transactions in accordance with mutual agreement. Also, the balance in special vostro accounts can be used for payments for projects and investments, export or import advance flow management, investment in government treasury bills, government securities, etc.

For approval process the bank of a partner country may approach an AD bank in India for opening of Special INR VOSTRO account. The AD bank will seek approval from the Reserve Bank with details of the arrangement.

AD bank maintaining the special Vostro Account shall ensure that the correspondent bank is not from a country or jurisdiction in the updated FATF Public Statement on High Risk & Non Co-operative Jurisdictions on which FATF has called for counter measures  (KNN Bureau)