International Settlement of Trade in Indian Rupee: The Next Step to Atmanirbhar Bharat on a Global Scale?

International Settlement of Trade in Indian Rupee:-

When Indian Prime Minister Narendra Modi came up with the idea of "Atmanirbhar Bharat" post-Covid-19, the core idea was to become "self-reliant" and minimize foreign dependence. It seems like RBI has found a way to do exactly what was preached by the honorable PM of the country. 

The country, courtesy of RBI's “International Settlement of Trade in Indian Rupee” structure, oversaw the first trade settlement with a foreign nation in Indian Rupee. The trade was established with India's grey-haired friend, Russia!

RBI, in its efforts to stabilize the Indian rupee and make it a globally accepted currency, brought up the "International Settlement of Trade in Indian Rupee" scheme in July last year. 

Without the settlement of trade, India dealing with other countries has to buy and sell in US Dollars, which brings a lot of conversion charges to the table, not to mention the fluctuating foreign exchange rates. 

To facilitate the International Settlement of Trade in the Indian Rupee scheme, RBI has also launched the "Vostro" and "Nostro" accounts. The Rupee Vostro account is the one that allows foreign banks to directly connect with an Indian bank. These are the “special rupee accounts” helping foreign buyers and sellers trade conveniently. 

The Nostro account is the Indian bank's account in a foreign bank. The currency will be based on the country associated with the Nostro account. 

With sanctions imposed on Russia and Iran by the US, there couldn't have been a better time to implement the plans of Internationalising the Indian rupee. In addition, countries such as Bangladesh, Sri Lanka, and Mauritius are ready to trade with India in the new system. 

As per reports, over 30 countries have shown interest in trading with India amidst the revelation of the International Settlement of Trade in the Indian Rupee scheme.  

One can hardly argue with the fact that India is a global importer. Nevertheless, the International Settlement of Trade in the Indian Rupee scheme developed by RBI will help India save "dollar outflows." It is critical to saving the constantly "depreciating" value of the Indian rupee to its US counterpart. 

However, it is not a bed full of roses for RBI and India in general. There are many challenges on the road to internationalizing the Indian rupee. One of the foremost hindrances is the lack of capital within the country. India will require foreign investments if the goal of “financial independence” is to be achieved. 

The International Settlement of Trade in the Indian Rupee scheme will also have a say in the monetary policies within the country. The probability of increased volatility of the Indian rupee in case of inflation, and factors deciding International trade, such as political relations, exchange rates, etc., will pose a great set of challenges to the government of India and RBI. 

Even if the challenges are many and the risk is high, experts believe that India has to take a decision now and implement the policy to gain long-term benefits and independence!

For more updates keep visiting our website www.topstoriesworld.com where we provide unbiased, true, and top stories of the world.