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Many countries have shown interest in bilateral trade in the rupee after RBI's recent mechanism announcement, as per Finance Minister Nirmala Sitharaman on Tuesday. The FM believes along with this and other government measures are toward full capital account convertibility. The minister was talking at Hero Mindmine Summit.

When asked about India being ready for capital account convertibility, Sitharaman told in the Summit that "It isn’t the ruble-rupee which was in the old format. Now this (bilateral rupee trade) formulation, which I am glad the RBI has come up at a time which was so critical," as reported by PTI.

Revealing that many countries have shown interest in cross-border trade in the Indian rupee, Sitharaman also added that in a way it is opening the Indian economy more than what can be imagined.

Further, in the Summit, she said that post-pandemic, India is coming up with so many out-of-the-box solutions. She highlighted that " we are a lot more open with the Indian economy, a lot more open in the way we are talking to countries, we are willing to have our digital platform become interoperable between countries to enable cross-border transactions."

In July, RBI introduced a detailed circular on cross-border trade transactions. It decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in INR.

According to the RBI's circular, all exports and imports under this arrangement may be denominated and invoiced in Rupee (INR). Also, the settlement of trade transactions shall take place in INR.

Under cross-border trade, RBI also directed that the exchange rate between the currencies of the two trading partner countries may be market determined.

On imports, RBI's circular directed that Indian importers undertaking imports through this mechanism shall make payment in INR which shall be credited into the Special Vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller /supplier.

In regards to exports, RBI guided that Indian exporters, undertaking exports of goods and services through this mechanism, shall be paid the export proceeds in INR from the balances in the designated Special Vostro account of the correspondent bank of the partner country.

The cross-border trade in rupee is expected to promote the growth of global trade with an emphasis on exports from India and to support the increasing interest of the global trading community in INR.

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