New Delhi, May 5 (KNN) Exporters have asked the Reserve Bank of India (RBI) to give adequate publicity to trade settlement in rupee and the currencies of key trading partners beyond the US dollar.
During a meeting last week in Mumbai, Federation of Indian Export Organisations (FIEO) President S C Ralhan told RBI Governor Sanjay Malhotra that better awareness about which banks facilitate local currency trade would lead to improved utilisation of this service.
Ralhan emphasised that conducting trade with certain countries in rupees instead of dollars preserves foreign exchange and simplifies trade processes.
This follows the December 2023 revision of the Foreign Exchange Management Regulations, which enabled cross-border transactions in all foreign currencies—including currencies of trading partner countries—and the rupee.
Since the RBI permitted invoicing and payment of international trade transactions in rupees and other local currencies, 123 correspondent banks from 30 trading partners have established special accounts in India to facilitate such trade.
The central bank has authorised 56 Special Rupee Vostro Accounts (SVRO) with 26 banks dealing in foreign exchange transactions.
Additionally, the RBI has entered into Local Currency Settlement System (LCSS) arrangements with select trade partners—UAE, Indonesia, and Maldives—to encourage cross-border trade settlements in Indian rupee and the local currency of the partner country.
At the meeting, Ralhan also highlighted concerns regarding diminishing credit support to exporters, noting that net outstanding credit has contracted despite export growth.
“If credit doesn’t flow quickly and adequately, we’ll lose out on big global opportunities,” the FIEO president warned.
The exporters’ body also sought RBI’s support for immediate implementation of the Interest Equalisation Scheme (IES) or interest subsidy scheme to mitigate the high cost of credit faced by Indian exporters.
“The credit cost has become more important as the payment period has been extended by buyers facing liquidity challenges. Many countries help their exporters with cheaper loans or subsidies. In India, without schemes like these our exporters are struggling to match prices with global competitors,” Ralhan stated.
He further pointed out that even when banks approve loans for exporters, only about 35-40 per cent of the approved amount is actually utilised, often due to complicated, slow, or unclear processes for accessing these funds.
“We need to fix this so exporters can actually use the money that’s been approved for them,” he concluded.
(KNN Bureau)
