Rupee Accounts: RBI Greenlights Overseas Openings

On Thursday, the Reserve Bank of India (RBI) sanctioned the establishment of rupee accounts abroad, a move integral to its strategic blueprint to elevate the global stature of the domestic currency. The central bank, in its annual dossier, underscored the significance of perpetually aligning the Foreign Exchange Management Act (FEMA) operational framework with the dynamic macroeconomic milieu, emphasizing the streamlining of multifarious directives.

The RBI delineated a comprehensive strategic agenda for 2024-25, encapsulating the liberalization of the external commercial borrowing (ECB) structure and the commencement of the initial phase of the SPECTRA project, a software platform for the reporting and approval of ECBs and trade credits.

As part of the 2024-25 itinerary for the rupee’s internationalisation, the RBI will authorize the creation of INR accounts abroad by persons residing outside India (PROIs).

“Initiating INR lending by Indian banks to PROIs and facilitating foreign direct investment (FDI) and portfolio investments via specialized accounts [special non-resident rupee (SNRR) and special rupee vostro account (SRVA)],” the report detailed. Additionally, the agenda for the ongoing fiscal year encompasses the rationalization of the Liberalized Remittance Scheme (LRS) and a reassessment of the IFSC regulations under FEMA.

The RBI’s report further elucidated that the adjustment of regulations aimed at advancing the internationalisation of the INR was pursued to facilitate bilateral trade settlements in local currencies.

Looking ahead, the central bank affirmed that its liquidity maneuvers would remain consonant with the monetary policy stance, whereas foreign exchange operations would be directed by the imperative of maintaining orderly rupee exchange rate movements.