RBI panel sets global road map for rupee

livemint.com:

MUMBAI : A Reserve Bank of India (RBI) appointed committee on Wednesday has recommended a roadmap to achieve internationalisation of rupee including efforts for inclusion in the International Monetary Fund’s Special Drawing Rights (SDR) basket. The inter-deparmental group headed by RBI executive director RS Ratho in its report said the rupee has the potential to become an international currency as India is one of the fastest growing economies and has shown resilience in the face of major headwinds.

It also said India has made progress in capital account convertibility, global value chain integration and setting up of GIFT city. The higher use of rupee in invoicing and settlement of international trade, as well as in capital account transactions, will give it a progressively international presence, it said.

The committee has recommended short term measures such as need to design a template and adopt a standardised approach for examining the proposals on bilateral and multilateral trade arrangements for invoicing, settlement and payment in INR and local currencies. The panel also encouraged opening of INR accounts for non-residents (other than nostro accounts of overseas banks) in and outside India.

It also recommended integrating Indian payment systems with other countries for cross-border transactions and strengthening financial markets by fostering a global 24×5 INR market and promoting India as the hub for INR transactions and price discovery. There is also a need for recalibrating the foreign portfolio investment (FPI) regime and rationalise know your customer (KYC) norms and provide incentives to exporters for INR trade settlement.