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

FEMA - Borrowing and Lending [including External Commercial Borrowing (ECB) and Trade Credit (TC)]

Reserve Bank of India (RBI) has amended the regulations for borrowing and lending under the Foreign Exchange Management Act, 1999 (FEMA). What are the regulations for External Commercial Borrowing (ECB)? External Commercial Borrowing (ECB) means borrowing by an eligible borrower from a recognised lender. Eligible borrowers – Any person resident in India (other than an individual) that is incorporated, established or registered under a Central or State Act is an eligible borrower, provided such person is permitted for ECB in terms of applicable Acts. An eligible borrower that is under a restructuring scheme or corporate insolvency resolution process may raise ECB only if specifically permitted under the restructuring or resolution plan. An eligible borrower against whom any investigation, adjudication or appeal by a law enforcement agency for contravention of any rule, regulation or direction issued under FEMA is pending, may raise ECB notwithstanding the pending investigation or adjudi...
Post a Comment
Read more

Guidelines to facilitate faster cross-border inward payments

Reserve Bank of India (RBI) has issued guidelines to facilitate faster cross-border inward payments. What is the rationale behind the guidelines? The RBI’s Payments Vision 2025 aims to bring efficiency in the cross-border payments aligning with the G20 roadmap for cross-border payments that has set targets for achieving cheaper, faster, more transparent, and more accessible cross-border payments. One of the challenges with speed of cross-border payments is experienced at the beneficiary leg i.e., the time taken from receipt of the payment at the beneficiary bank till credit to the beneficiary account. What are the guidelines to facilitate faster cross-border inward payments? Banks shall inform their customer of the receipt of cross-border inward transactions immediately on receipt of inward message. Messages received after close of operating hours of banks shall be informed to customer immediately at the start of the next business day. Banks shall undertake reconciliation and confirmat...
Post a Comment
Read more

Guidelines on Money Changing Activities (Updated as on April 02, 2026)

Reserve Bank of India (RBI) has updated the guidelines on money changing activities. Who is Authorised Person? Authorised Person means an authorised dealer, money changer, off-shore banking unit or any other person authorised under section 10(1) of Foreign Exchange Management Act, 1999 (FEMA) to deal in foreign exchange or foreign securities. What are the categories of Authorised Persons? Authorised Dealer (AD) Category-I – entities which are authorised by RBI to carry out all permissible current and capital account transactions. Authorised Dealer (AD) Category-II – entities which are authorised by RBI to carry out specified non-trade related current account transactions, all the activities permitted to Full Fledged Money Changers (FFMC) and any other activity as decided by RBI, and include (i) Upgraded FFMCs; (ii) Select Regional Rural Banks (RRBs); (iii) Select Urban Cooperative Banks (UCBs); and (iv) Other entities. Authorised Dealer (AD) Category-III – entities which are authorised...
Post a Comment
Read more

Continuous Clearing and Settlement on Realisation in Cheque Truncation System (CTS) (Updated as on December 24, 2025)

Reserve Bank of India (RBI) has issued direction on continuous clearing and settlement on realisation in Cheque Truncation System (CTS). What is Cheque Truncation System (CTS)? Cheque Truncation System (CTS) involves halting the physical movement of the cheque and its replacement by images of the instrument and the corresponding data contained in the MICR line.  In CTS, 3 images are taken of each cheque – front Gray Scale, front Black & White and back Black & White. MICR (Magnetic Ink Character Recognition) is a 9-digit code printed at the bottom of cheques using magnetic ink – first 3 digits indicate City Code, middle 3 digits indicate Bank Code and the last 3 digits indicate Bank Branch Code. Only CTS-2010 standards compliant instruments can be presented for clearing through CTS. The presenting banks which truncates the cheques need to preserve the physical instruments for 10 years. From when will the continuous clearing and settlement on realisation in CTS be implemented...
Post a Comment
Read more

Directions on Trade Relief Measures (Updated as on March 31, 2026)

Reserve Bank of India (RBI) has issued directions on trade relief measures in respect to credit facilities extended by regulated entities. To whom shall the directions be applicable? The directions shall be applicable to the following Regulated Entities (REs) – Commercial Banks Primary (Urban) Co-operative Banks, State Co-operative Banks and Central Co-operative Banks Non-Banking Financial Companies (including Housing Finance Companies) All-India Financial Institutions Credit Information Companies What are the eligibility criteria for the trade relief? RE shall satisfy itself that the borrower’s business is impacted by trade disruptions caused by global headwinds. For the purpose of considering relief, a borrower shall be deemed to be eligible upon fulfilment of all of the following conditions – The borrower is engaged in exports relating to any of the sectors specified in the directions. The borrower had an outstanding export credit facility from a RE as of August 31, 2025. The accoun...
Post a Comment
Read more