📷 Image Credits: Mint
The Reserve Bank of India (RBI) has recently announced a significant move that allows the opening of rupee accounts outside India as part of its strategic agenda to internationalise the domestic currency. The RBI’s annual report for the financial year 2024-25 highlighted key initiatives aimed at liberalising external commercial borrowing (ECB) framework and launching phase I of the software platform for ECBs and trade credits reporting and approval project, known as SPECTRA.
In a bid to align the Foreign Exchange Management Act (FEMA) operating framework with the changing macroeconomic landscape, the RBI emphasized the rationalization of existing guidelines. One of the major highlights of this move is the permission given to persons resident outside India (PROIs) to open rupee (INR) accounts outside the country. This initiative is part of the RBI’s strategic plan for 2024-25.
The RBI’s report also mentions other key developments, such as INR lending by Indian banks to PROIs and facilitating foreign direct investment (FDI) and portfolio investment through special accounts like special nonresident rupee (SNRR) and special rupee vostro account (SRVA). Additionally, the report outlines the rationalization of the Liberalised Remittance Scheme (LRS) and a review of IFSC regulations under FEMA as part of the agenda for the current financial year.
Furthermore, the RBI’s efforts towards the internationalisation of the INR are geared towards enabling the settlement of bilateral trade in local currencies. The central bank aims to ensure that liquidity operations are in line with the monetary policy stance, while foreign exchange operations are guided by the objective of maintaining orderly movements in the rupee exchange rate.
Moreover, the RBI has reported a remarkable 141 per cent surge in its net income for the financial year 2024, driven by lower expenditures and provisions. This increase in net income has enabled the central bank to declare a record dividend payout of ₹2.1 trillion to the government, surpassing budget estimates and analysts’ expectations.
The move to allow rupee accounts outside India marks a significant step towards the internationalisation of the domestic currency, providing more flexibility for non-residents and promoting bilateral trade in local currencies. Stay tuned to HeadlineFly.com for more updates on this development.
