RBI Explores New Avenues for Use of Indian Rupee Held by Russian Trade Partners
Central Bank Eyes Trade Settlement and Investment Options
Mumbai, March 19: The Reserve Bank of India is working on expanding the usage of Indian rupee balances accumulated by Russian trade partners, a senior official said on Thursday, highlighting ongoing efforts to strengthen bilateral financial mechanisms.The central bank is evaluating multiple avenues that would allow these rupee holdings to be used more effectively. These include settling imports from India as well as facilitating capital investments within the country.
RBI Focuses on Enhancing INR Utilisation
N Senthil Kumar, Chief General Manager in the RBI’s Foreign Exchange Department, said the initiative is aimed at enabling Russian entities to deploy their rupee reserves in productive ways.He stated that the RBI is working on mechanisms to allow Russian partners to use the accumulated INR either for import settlements or for making investments in India.
Push for Local Currency Trade Between India and Russia
In recent years, India and Russia have increasingly shifted towards settling bilateral trade in local currencies, reducing dependence on the US dollar. As part of these efforts, the RBI had previously permitted surplus rupee balances to be invested in government securities.Despite these developments, Kumar pointed out that there remains a degree of inertia among stakeholders when it comes to adopting local currency transactions.
Need to Build Trust and Increase Transaction Volumes
Kumar emphasized the importance of building trust among exporters and importers to encourage wider adoption of INR-based trade settlements. He noted that increased confidence in local currency usage would help boost transaction volumes.He also called for a rise in INR-Rouble transactions, underlining that market development depends on consistent activity.
According to Kumar, as more transactions take place and interest in INR-Rouble trade grows, the market for such exchanges is expected to evolve further.
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