Mint Primer | The significance of RBI’s plan to take the rupee global
Subscribe to enjoy similar stories. The Reserve Bank of India (RBI) has allowed non-residents to open rupee accounts in the overseas branches of India-registered authorized dealer banks to conduct cross-border transactions. Mint explains the significance of this move: In a circular last week, RBI allowed overseas branches of authorized dealer (AD) banks to open rupee accounts for non-resident Indians for settling current and capital account transactions with Indian residents. AD banks are authorized by RBI to deal in foreign exchange or foreign securities.
RBI also allowed non-resident Indians to settle transactions among themselves using their rupee accounts. The guidelines permit non-residents Indians to use rupee accounts for foreign investments in rupee assets. The new rules aim to ease the process of cross-border transactions, particularly for traders and investors.
A non-resident Indian (NRI) in the US, for instance, can now open a rupee account with the New York branch of an India-registered AD bank. They will be able to hold rupees received for exports to India and use the rupee balance for business payments to a person resident in India. These accounts can be used for receiving export earnings, handling advance remittances, and making import payments.
With this, NRIs will have the option of holding and utilizing the rupee proceeds as per requirements. However, exporters are required to repatriate any remaining funds to India by the end of the following month. Read more: What you need to know about RBI rules when investing abroad While the rules are meant to promote the rupee in global trade, bankers say they are unlikely to see many transactions as the rupee is a non-convertible currency.
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