Indian Banks' Association and apex exporters body FIEO will organise sensitisation programmes in different parts of the country to educate stakeholders on modalities of rupee trade, an official said.
It was decided on December 5, when the finance ministry held a review meeting with commerce ministry officials, CEOs of banks, and exporters to promote cross-border trade in the rupee.
An RBI representative gave clarifications of issues raised by export promotion councils and concerned banks on the matter "and it was decided that the Indian Banks Association and FIEO (Federation of Indian Export Organisations) will jointly organise a sensitisation on rupee trading arrangement so that bankers, as well as exporters, get clarity on how to do this," the official said.
FIEO Director General Ajay Sahai said that the rupee settlement mechanism will help exports insulating exporters from the exchange risks and encouraging the partners to import more from us to liquidate or reduce the rupee balance lying in their account.
"This will give a fillip to bilateral trade as well and when expanded to a large number of countries, will help in the internationalisation of the Indian Rupee," Sahai said.
Following the Russia-Ukraine war and the sanctions imposed by the West, India has been trying to promote rupee trade with several countries.
Following detailed guidelines from the Reserve Bank of India (RBI) on cross-border trade transactions in domestic currency in July, about nine special vostro accounts have been opened with two Indian banks to facilitate overseas trade in the rupee.
Sberbank and VTB Bank -- the largest and second-largest banks of Russia, respectively -- are the first foreign lenders to receive the approval after the RBI announced the guidelines.
As per the guidelines, the RBI decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in INR.
Another Russian bank Gazprombank, which does not have its bank in India, has also opened this account with Kolkata-based UCO Bank.
The move to open the special vostro account clears the deck for settlement of payments in rupee for trade between India and Russia, enabling cross-border trade in the Indian currency, which the RBI is keen to promote.
The RBI has allowed the special vostro accounts to invest the surplus balance in Indian government securities to help popularise the new arrangement.
UCO Bank already has a vostro account-based facility in Iran. Gazprombank, or GPB, is a privately-owned Russian lender and the third-largest bank in that country by assets.
"Indian importers undertaking imports through this mechanism shall make payment in INR, which shall be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller/supplier," the RBI had said.