Skip to main content

International Trade Settlement in Indian Rupees (INR)

Reserve Bank of India (RBI) has put in place an additional arrangement for invoicing, payment, and settlement of exports / imports in Indian Rupee (INR). 

What does new arrangement entail?

The broad framework for cross border trade transactions in Indian Rupee (INR) under Foreign Exchange Management Act, 1999 (FEMA) is as below –

  • All exports and imports under this arrangement may be denominated and invoiced in INR.
  • Exchange rate between the currencies of the two trading partner countries may be market determined.
  • The settlement of trade transactions under this arrangement shall take place in INR.

How are the transactions processed under new arrangement?

For settlement of trade transactions with any country, AD bank in India may open Special Rupee Vostro Accounts (SRVAs) of correspondent banks of the partner trading country. 

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

  • Indian importers undertaking imports through this mechanism shall make payment in INR which shall be credited into the SRVA of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller / supplier.
  • 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 SRVA of the correspondent bank of the partner country.

Which documents are required under new arrangement?

The export / import undertaken and settled under Rupee Payment Mechanism shall be subject to usual documentation and reporting requirements. Letter of Credit (LC) and other trade related documentation may be decided mutually between banks of the partner trading countries under the overall framework of Uniform Customs and Practice for Documentary Credits (UCPDC) and incoterms. 

What are guidelines on advance payments, set-off and bank guarantees under new arrangement?

  • Indian exporters may receive advance payment against exports from overseas importers in INR through the Rupee Payment Mechanism. Before allowing any such receipt of advance payment against exports, Indian Banks shall ensure that available funds in these accounts are first used towards payment obligations arising out of already executed export orders / export payments in the pipeline. To ensure that the advance is released only as per the instructions of the overseas importer, the Indian bank maintaining the SRVA of its correspondent bank shall verify the claim of the exporter with the advice received from the correspondent bank before releasing the advance.
  • ‘Set-off’ of export receivables against import payables in respect of the same overseas buyer and supplier with facility to make / receive payment of the balance of export receivables / import payables, if any, through the Rupee Payment Mechanism may be allowed.
  • Issue of Bank Guarantee for trade transactions undertaken through this arrangement, is permitted.

How can surplus balance be utilised under new arrangement?

The Rupee surplus balance held may be used for permissible capital and current account transactions in accordance with mutual agreement. The balance in SRVAs can be used for –

  1. Payments for projects and investments.
  2. Export / Import advance flow management
  3. Investment in Government Treasury Bills, Government securities, etc.

(Updated on October 03, 2025)

The surplus balances in SRVAs can be used for investment in non-convertible debentures / bonds and commercial papers issued by an Indian company.

What is approval process under new arrangement?

The bank of a partner country may approach an AD bank in India for opening of SRVA. The AD bank will seek approval from RBI with details of the arrangement. AD bank maintaining the SRVA need to ensure that the correspondent bank is not from a country or jurisdiction in the updated FATF Public Statement on High Risk & Non Co-operative Jurisdictions on which FATF has called for counter measures.

(Updated on August 05, 2025)

AD banks are allowed to open SRVAs of overseas correspondent banks without referring to RBI for approval.

What are the guidelines on opening additional special current account?

AD Category-I banks maintaining SRVA are permitted to open an additional special current account for its exporter / importer constituent for settlement of their export / import transactions.


References

Reserve Bank of India. (2022, July 11). 'International Trade Settlement in Indian Rupees (INR)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12358&Mode=0

Reserve Bank of India. (2023, November 17). 'International Trade Settlement in Indian Rupees (INR) – Opening of additional Current Account for exports proceeds'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12568&Mode=0

Reserve Bank of India. (2024, June 11). 'International Trade Settlement in Indian Rupees (INR) – Opening of additional Current Account for settlement of trade transactions'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12693&Mode=0

Reserve Bank of India. (2025, August 05). 'International Trade Settlement in Indian Rupees (INR)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12887&Mode=0

Reserve Bank of India. (2025, October 03). 'International Trade Settlement in Indian Rupees (INR)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12910&Mode=0

Reserve Bank of India. (2025, August 05). 'International Trade Settlement in Indian Rupees (INR) – Revised procedure for opening of Special Rupee Vostro Account (SRVA)'. Retrieved from https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=60955

Reserve Bank of India. (2025, October 03). 'Investment in Corporate Debt Securities by Persons Resident Outside India through Special Rupee Vostro account'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12909&Mode=0


Follow at - Telegram   Instagram   LinkedIn   Twitter

Labels:

Comments

Post a Comment

Popular Posts

Modified Interest Subvention Scheme for Agricultural Loans

Reserve Bank of India (RBI) has published the modified interest subvention scheme (MISS) for short term loans for agriculture and allied activities availed through Kisan Credit Card (KCC) during the financial year 2025-26. Which loans are covered under modified interest subvention scheme (MISS)? The short-term crop loans and short-term loans for allied activities including animal husbandry, dairy, fisheries, bee keeping etc. up to an overall limit of ₹3 lakh to farmers through KCC during the year 2025-26 will be covered for interest subvention. Which lending institutions are covered under MISS? The MISS is applicable to the lending institutions viz. Public Sector Banks (PSBs) and Private Sector Banks (in respect of loans given by their rural and semi-urban branches only), Small Finance Banks (SFBs) and computerized Primary Agriculture Cooperative Societies (PACS) ceded with Scheduled Commercial Banks (SCBs), on use of their own resources.  How much is the interest subvention? The a...
Post a Comment
Read more

Digital Payments Awareness Week 2026

Reserve Bank of India (RBI) is observing digital payments awareness week from March 09 to 15, 2026. Digital Payments Awareness Week (DPAW) Digital Payments Awareness Week (DPAW) is an initiative to highlight the impact and importance of digital payments and to create awareness about safe usage of digital payment products.  Digital Payments Awareness Week (DPAW) 2026 Reserve Bank of India (RBI) is observing DPAW 2026 from March 09 to 15, 2026.  Under the mission ‘Har Payment Digital’, the theme for the current year is ‘Thoda Dhyan Se’ (be alert/ be careful). The theme emphasises the safe use of digital payments. ‘Har Payment Digital’ mission RBI had launched the mission ‘Har Payment Digital’ on the occasion of the DPAW 2023. This is part of RBI’s endeavour to make every person in India a user of digital payments. Previous Digital Payments Awareness Weeks (DPAWs) Year Theme 2025 ‘India Pays Digitally’ under the mission ‘Har Payment Digital’ ...
Post a Comment
Read more

Export and Import of Goods and Services

Reserve Bank of India (RBI) has issued regulations on export and import of goods and services. What are the regulations for declaration of exports? An exporter of goods shall furnish to the specified authority, a declaration in the Export Declaration Form (EDF) specifying the amount representing the full export value of goods, at the time of export. EDF will be deemed to be submitted as part of shipping bill for goods exported through Electronic Data Interchange (EDI) port. An exporter of services shall furnish to the specified authority, a declaration in EDF specifying the amount representing the full export value of services, within 30 days from the end of month in which invoice for services has been raised. The exporter of services who has exported services to one or more recipients in a month, may submit a single EDF for all such exports. The exporter of services other than software, may submit an EDF on or before the date of receipt of payment. In the case of a non-EDI port for ex...
Post a Comment
Read more

FEMA - Regulations on Guarantees

Reserve Bank of India (RBI) had issued regulations governing guarantees under the Foreign Exchange Management Act, 1999 (FEMA). What is a guarantee? A guarantee, including a counter-guarantee, means a contract, by whatever name called, to perform the promise, or discharge a debt, obligation or other liability (including a portfolio of debts, obligations or other liabilities), in the event of default by the principal debtor. Who are the participants in a guarantee transaction? Principal debtor – a person in respect of whose default the guarantee is given. Surety – a person who gives a guarantee. Creditor – a person to whom the guarantee is given. When can a person resident in India act as surety / principal debtor? A person resident in India may act as a surety / principal debtor for a guarantee, subject to conditions that – The underlying transaction for which the guarantee is being given or arranged is not prohibited under FEMA guidelines. The surety and the principal debtor are eligi...
Post a Comment
Read more

Priority Sector Lending (PSL) guidelines (updated as on January 19, 2026)

Reserve Bank of India (RBI) has issued the revised guidelines on Priority Sector Lending (PSL) which has come into effect from April 01, 2025.  To whom does Priority Sector Lending (PSL) guidelines apply? Priority Sector Lending (PSL) guidelines apply to – Commercial Bank [including Regional Rural Bank (RRB), Small Finance Bank (SFB), Local Area Bank (LAB)] Primary (Urban) Co-operative Bank (UCB) other than Salary Earners’ Bank  What are the categories under PSL? The categories under priority sector are as follows – Agriculture Micro, Small and Medium Enterprises Export Credit Education Housing Social Infrastructure Renewable Energy Others What are the PSL targets for banks? The targets and sub-targets set under PSL, to be computed on the basis of the Adjusted Net Bank Credit (ANBC) / Credit Equivalent of Off-Balance Sheet Exposures (CEOBSE) as applicable as on the corresponding date of the preceding year are as below – Categories Total Priority Sector ...
Post a Comment
Read more