Livemint.com published an interesting article that is a testament to what is taking place in regards to the US dollar reserve currency status, ‘Union Bank becomes first to open special vostro account for India-Malaysia trade settlement in rupee’ reported that the development of a new trading option between India and Malaysia was to begin with the implementation of using rupees as the “Union Bank of India becomes the first bank in the country to open a Special Rupee Vostro Account through its corresponding bank in Malaysia i.e. India International Bank of Malaysia. This means that trade between India and Malaysia can now be settled in the Indian rupee, in addition to the current modes of settlement in other currencies.” The article mentions the Reserve Bank of India’s recommendations following a publication from last July on how to settle international trade using rupees, Union Bank’s officials said that “this measure is aimed at facilitating the growth of global trade and to support the interests of the global trading community in Indian Rupee” they added that “the mechanism will allow the Indian and Malaysian traders to invoice the trade in Indian Rupee and therefore achieve better pricing for goods and services traded.” On July 11th, 2022, the Reserve Bank of India published ‘International Trade Settlement in Indian Rupees (INR)’ which recommended that global trade should involve INR’s (Indian Rupee):
In order to promote growth of global trade with emphasis on exports from India and to support the increasing interest of global trading community in INR, it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports / imports in INR. Before putting in place this mechanism, AD banks shall require prior approval from the Foreign Exchange Department of Reserve Bank of India, Central Office at Mumbai
The recommendations include Invoicing exports and imports that “may be denominated and invoiced in Rupee (INR).” It also involves a new exchange rate between trading partners and settlement of trade transactions, all in rupees.
The next G20 meeting will be hosted in New Delhi, a venue where India can push rupees for international trade settlements as another report by Livemint.com, ‘India to use G20 gathering to push rupee trade’ said that “India will use the G20 platform to push international trade settlement in rupees, especially with countries that are facing currency issues, commerce secretary Sunil Barthwal said on Monday.” Barthwal said that “we are interested in improving the trade with respect to the currencies of the countries which are trading (with India).” In a statement from the Ministry of Commerce and Industry, they made it clear that the intentions under India’s leadership is “to build a shared understanding of the challenges being faced in accelerating global trade and investment, and how existing opportunities can be harnessed to formulate human-centric concrete outcomes and deliverables.” The Reserve Bank of India has moved forward with authorizing dealer banks to open Special Rupee Vostro Accounts (SRVAs) to correspond with banks in more than 18 countries so far:
As per data presented in the Parliament on 14 March, RBI has approved domestic and foreign authorized dealer banks in 60 cases for opening of special rupee vostro accounts (SRVAs) of correspondent banks from 18 countries. These include Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, and United Kingdom, junior finance minister Bhagwat Karad said in the Rajya Sabha