The Narendra Modi government has started this initiative that international trade in Indian rupee should be accepted more and more and India’s dependence on dollar should be reduced. In such a situation, in the last few years, the Government of India has also taken the initiative to start business in Indian Rupee by talking about it and making agreements with many countries. At present, work has started in this regard with about 18 countries. Commerce and Industry Minister Piyush Goyal has said that doing international business in domestic currency will help the industry in reducing transaction costs and many countries are talking to the Reserve Bank of India (RBI) in this regard.
The RBI and the finance ministry had last year asked the top management of banks and industry chambers to carry out import and export transactions in rupees. They want to link Indian banks with their counterparts abroad to open Rupee Vostro accounts, necessary for starting cross-border trade in Indian currency instead of dollars.
Goyal said that today many countries are realizing that currency conversion is required for trade and this involves conversion cost, which also increases the transaction cost.
“We can solve these problems with a rupee trading system,” he told reporters.
The minister said that many countries are in talks with RBI in this regard. Many banks, including HDFC Bank and UCO Bank, have opened special Vostro accounts for international trade in rupees. Russia’s largest bank Sberbank and second largest bank VTB Bank became the first foreign banks to get approval after the RBI issued guidelines on international trade in rupees in July last year.
Another Russian bank Gazprom has also opened a Vostro account with Kolkata based UCO Bank. Gazprom does not have any unit in India.