RBI allows rupee accounts outside India for currency internationalisation; simplifies norms for non-residents

  • The RBI said that it will permit the opening of rupee accounts outside India by persons resident outside India (PROIs) as part of the 2024-25 strategic agenda.

Written By Nikita Prasad
First Published30 May 2024
There have been media reports that the RBI might pay an extra Rs10,000 crore  as interim dividend to the government for the fiscal year ending March 2018.
There have been media reports that the RBI might pay an extra Rs10,000 crore as interim dividend to the government for the fiscal year ending March 2018.

The Reserve Bank of India (RBI) on Thursday, May 30, allowed the opening of rupee accounts outside India as part of its strategic plan to internationalise the domestic currency. The RBI said in its annual report today that it has finalised a strategic plan for 2024-25 and envisaged liberalisation of external commercial borrowing (ECB) framework and 'Go-live' for phase I of software platform for ECBs and trade credits reporting and approval (SPECTRA) project.

‘’With emphasis on continuous synchronisation of the FEMA operating framework with the evolving macroeconomic environment, rationalisation of various guidelines will be of primary focus,'' the central bank said in its annual report. The RBI will permit the opening of rupee (INR) accounts outside India by persons resident outside India (PROIs) as part of the 2024-25 agenda.

Also Read: India poised for stronger growth over next decade amid AI, climate risks: RBI

"INR lending by Indian banks to PROIs and enabling foreign direct investment (FDI) and portfolio investment through special accounts [special nonresident rupee (SNRR) and special rupee vostro account (SRVA)," said the report.

The rationalisation of the Liberalised Remittance Scheme (LRS) and review of the IFSC regulations under FEMA also are part of the agenda for the current financial year. The RBI report further said that the rationalisation of regulations towards the internationalisation of INR was undertaken to enable the settlement of bilateral trade in local currencies. 

Also Read: Expert View | India's FY24 GDP growth to hit 8%; Infra investments to exceed consumption in FY25: DBS Bank's Radhika Rao

RBI FY24 Financials

RBI said the liquidity operations would continue to be in sync with the stance of the monetary policy, while the foreign exchange operations would be guided by the objective of ensuring orderly movements in the exchange rate of the rupee.

Meanwhile, RBI reported a massive 141 per cent surge in its net income for the financial year 2024 (FY24), driven by a decline in expenditures, particularly lower provisions. This impressive increase in net income paved the way for the announcement of a record dividend by the central bank. Net interest income soared to 2.1 trillion by the end of March 2024, up from 87,420 crore the previous year.

This substantial rise in net income enabled the RBI to declare a record dividend payout of 2.1 trillion to the government for FY24. This was higher than the government’s budget estimate and analysts' expectation of 1 trillion, and 141 per cent larger than the 87,416-crore dividend payout in FY23.

 

 

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