RBI allows invoicing, payments for international trade in Indian Rupee

RBI’s composite financial inclusion index (FI-Index) capturing the extent of financial inclusion across the country rose to 56.4 in March 2022, showing growth across all parameters.

HIGHLIGHTS

• A circular in this regard was issued by the RBI on July 11, 2022
• The circular was subjected “International Trade Settlement in Indian Rupees (INR)”
• The information was confirmed by Union Minister of State for Finance Bhagwat Kisanrao Karad

Reserve Bank of India (RBI) has allowed invoicing and payments for international trade in the Indian Rupee, Union Minister of State for Finance Bhagwat Kisanrao Karad informed the Rajya Sabha on Tuesday.

In a written reply to a question in Rajya Sabha, Karad said the central bank has allowed payments for international trade in the Indian currency through a circular on “International Trade Settlement in Indian Rupees (INR)” issued on July 11, 2022.

Giving more information, the minister stated that in terms of Para 10 of the Circular, the approval process is that for the opening of Special INR Vostro accounts, banks of partner countries may approach Authorised Dealer (AD) banks in India which may seek approval from RBI with details of the arrangement.

The AD bank maintaining the Special INR Vostro Account is required to 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 countermeasures, he said.

RBI’s financial inclusion index rises

Meanwhile, the RBI’s composite financial inclusion index (FI-Index) capturing the extent of financial inclusion across the country rose to 56.4 in March 2022, showing growth across all parameters.

The index captures information on various aspects of financial inclusion in a single value ranging between 0 and 100, where 0 represents complete financial exclusion and 100 indicates full financial inclusion.

The value of FI Index for March 2022 stands at 56.4 vis-a-vis 53. 9 in March 2021, with growth witnessed across all the sub-indices,” the RBI said in a statement.

In August last year, the central bank said it has been conceptualised as a comprehensive index, incorporating details of banking, investments, insurance, postal, as well as the pension sector, in consultation with government and respective sectoral regulators.

The FI-Index comprises three broad parameters — Access (35 per cent), Usage (45 per cent), and Quality (20 per cent) with each of these consisting of various dimensions, which are computed based on several indicators.

The FI-Index was constructed without any ‘base year’ and as such it reflects the cumulative efforts of all stakeholders over the years towards financial inclusion.

The index is now published annually.

(With inputs from agencies)

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