The Business Bytes
TBB BUREAU
MUMBAI, APR 1, 2023
Besides the current modes of settlement in other currencies, trade between India and Malaysia can now be settled in Indian Rupee too. This follows the decision by the Reserve Bank of India in July 2022 to allow settlement of international trade in Indian Rupees. This measure is aimed at facilitating the growth of global trade and to support the interests of the global trading community in Indian Rupee.
Union Bank of India is the first Bank in India that has operationalised this mechanism by opening a Special Rupee Vostro Account through its Corresponding Bank in Malaysia i.e. India International Bank of Malaysia.
This mechanism will allow the Indian and Malaysian traders to invoice the trade in Indian Rupee and therefore achieve better pricing for goods and services traded. This mechanism is expected to also benefit the traders on both sides as they can directly trade in Indian Rupee and therefore save on currency conversion spreads.
India-Malaysia bilateral trade, which has reached US$19.4 billion in FY 2021-22, is expected to benefit from the option to settle bilateral trade in Indian Rupee.
