RBI Announces Measures to Enhance Cross-Border Transactions in Rupee

 RBI Announces Measures to Enhance Cross-Border Transactions in Rupee

The Reserve Bank of India (RBI) has conducted a review of the existing regulations under FEMA, 1999 to encourage cross-border transactions in Indian Rupees (Rupee Internationalization).

Recent Updates to FEMA Regulations by RBI:

• Non-resident individuals can now open INR accounts in overseas branches of Authorized Dealer banks to settle all permissible current and capital account transactions with residents of India.
• They can settle transactions with other non-residents using balances in repatriable INR accounts, such as SNRR (Special Non-Resident Rupee) accounts and SVRAs (Special Rupee Accounts).
• Balances in repatriable INR accounts can be used for foreign investments.
• Indian exporters can now open foreign currency accounts abroad to settle trade transactions, including receiving export proceeds and using them to pay for imports.

Internationalization of Rupee Internationalization refers to increasing the use of the rupee in cross-border transactions. This process begins with promoting the rupee for import and export trade, expands to current account transactions, and eventually extends to capital account transactions.

Benefits of Rupee Internationalization:

• Enhanced financial independence and protection from external shocks.
• More efficient cross-border trade, reduced demand for dollars, and a stronger INR.
• Lower foreign reserve requirements to manage external shocks.

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