Manmade and Technical Textiles Export Promotion Council (MATEXIL)

RBI allows International Trade Settlement in Indian Rupees (INR)

Circular No.ES/60/2022-23                                                    12th July, 2022    




To: Members of the Council          


Sub: RBI allows International Trade Settlement in Indian Rupees (INR) 


Dear Member,        


We would like to inform you that the Reserve Bank of India (RBI) has issued Notification No. RBI/2022-2023/90 dated 11th July, 2022 informing about the settlement of International Trade in Indian Rupees (INR). 


RBI has made an additional arrangement for invoicing, payment, and settlement of exports / imports in INR. Before putting in place this mechanism, Authorised Dealer (AD) banks shall require prior approval from the Foreign Exchange Department of RBI, Central Office at Mumbai. 


The broad framework for cross border trade transactions in INR under FEMA, 1999 is as delineated below:  

  1. Invoicing: All exports & imports under this arrangement may be denominated and invoiced in Rupee (INR).   
  2. Exchange Rate: Exchange rate between the currencies of the two trading partner countries may be market determined. 
  3. Settlement: The settlement of trade transactions under this arrangement shall take place in INR in accordance with the procedure laid down in Para 3 of the RBI’s Notification. 


In terms of Regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016, AD banks in India have been permitted to open Rupee Vostro Accounts. Accordingly, for settlement of trade transactions with any country, AD bank in India will open Special Rupee Vostro Accounts of correspondent bank/s of the partner trading country.  


To allow settlement of international trade transactions through this arrangement, it has been decided that:  

  1. Indian importers undertaking imports through this mechanism shall make payment in INR which shall be credited into the Special Vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller /supplier. 
  2. Indian exporters, undertaking exports of goods and services through this mechanism, shall be paid the export proceeds in INR from the balances in the designated Special Vostro account of the correspondent bank of the partner country. 
For detailed information on the following points, members may kindly refer to RBI’s Notification No. RBI/2022-2023/90: 
  1. Documentation,  
  2. Advance against exports,  
  3. Setting-off of export receivables,  
  4. Bank Guarantee,  
  5. Use of Surplus Balance,  
  6. Reporting Requirements,  
  7. Approval Process 


Please note that the instructions of RBI shall come into force with immediate effect.  


Members may kindly make a note of the above.  


Thanking you,                        


Yours faithfully,