Early last week, the Reserve Bank of India put in place a system to allow international trade and payment settlements in Indian rupees.
Indian traders undertaking imports via this mechanism shall make payments in rupees which shall be credited into the Special Vostro account of the correspondent bank of the partner country. Indian exporters shipping goods and services under this mechanism, shall be paid export proceeds in rupees from the balances in the designated Special Vostro account of the correspondent bank of the partner country.
Why is this development interesting? Which countries may be interested in using this facility? How does it help India?
