The Monetary Policy Committee of the Reserve Bank of India (RBI) has decided to allow Indian authorised dealer banks and their foreign branches to lend in Indian rupees to residents of Bhutan, Nepal and Sri Lanka.TAG_OPEN_p_14

The committee, headed by Governor Sanjay Malhotra, said the move was aimed at encouraging the use of the Indian rupee and local currency in cross-border trade.TAG_OPEN_p_13

According to the central bank, the rules under the Foreign Exchange Management Act have been gradually liberalized.TAG_OPEN_p_12 In this context, the provision of liquidity in Indian rupees to residents of other countries is important to make this initiative more effective. It has also been made clear that the necessary amendments will be implemented soon.

The RBI has prioritised the use of the Indian rupee in recent years to reduce dependence on the US dollar and other hard currencies in international trade.TAG_OPEN_p_11

In order to strengthen the internationalization of the rupee, the RBI has also announced various new initiatives for non-resident Indians.TAG_OPEN_p_10 It has adopted a policy of simplification of external commercial lending framework to simplify business presence and credit norms and to make it easier for non-residents to start business in India. The company has adopted a policy to invest the money in the account of Vostro in corporate bonds and commercial paper.

Also, a transparent exchange rate for the currencies of major trading partner countries will be provided. The government has decided to extend the remittance period from one month to three months and increase the foreign exchange expense period for merchant trade from four months to six months.

Investment Limit Extension: Preparation to increase the investment limit of NRIs including individual foreign investors in listed Indian companies from 5 percent to 10 percent and increase the combined limit from 10 percent to 24 percent and revision of remittance rules Once the amount sent under the current economic liberalized remittance scheme reaches $ 30 billion, this format will be simplified to create an environment for more transactions in rupees.