India-Saudi start discussions on trading in national currencies: MEA
Sep 11, 2023
New Delhi [India], September 11 : Ministry of External Affairs (MEA) Secretary (CPV & OIA), Ausaf Sayeed informed that India and Saudi have begun discussions on trading between both countries in national currencies and added that for this the proposals and consultations have been exchanged on Monday.
"The two sides have started discussing this. It is only at a discussion stage, proposals and concept notes have been exchanged. The Saudi side is aware that we have worked out similar arrangements with other countries in the region. So, the discussions will be beginning or have already begun," Secretary Sayeed said.
In recent times, India has taken substantial steps to promote the usage of its national currency, the Indian rupee, in international transactions. Collaborating with banks from 22 different countries, India has established special rupee vostro accounts in domestic banks, facilitating trading in national currencies.
As India continues to expand its footprint in the global trade arena, the adoption of the LCS system with the UAE sets a precedent for innovative trade practices that can reshape the course of international commerce.
Banks from 18 countries have been permitted by the Reserve Bank of India (RBI) to open Special Vostro Rupee Accounts (SVRAs) for settling payments in Indian rupees, the government told the Rajya Sabha.
In response to a question from BJP’s Sushil Kumar Modi, Union Minister of State for Finance Bhagwat Karad said SVRAs could be set up by banks of partner countries by approaching Authorised Dealer (AD) banks in India that may get permission from the RBI after the due procedure.
Earlier after the BRICS summit in Johannesburg, Foreign Secretary Vinay Kwatra said that discussions on trade settlements in national currency have been very positive within the BRICS framework.
India has recently started taking strong steps in trying to put structures in place before trade settlements in national currencies.
Secretary Kwatra also spoke on the India-Dirham rupee trade settlement mechanism with the United Arab Emirates.
"Most recently, a couple of months ago, we signed the India-Dirham rupee trade settlement mechanism with UAE. Now, India’s trade with UAE is roughly 90 billion dollars, more or less balanced. It opens up a good opportunity for both India and the UAE to explore that space," he said.
Earlier, the President of the UAE and PM Modi on July 15 witnessed the exchange of MoUs between the Reserve Bank of India and UAE Central Bank for the establishment of a framework to promote the use of local currencies (INR-AED) for cross-border transactions and another one for the bilateral cooperation on interlinking their payment and messaging systems.
The signing of the Local currency settlement (LCS) agreement took place during the recent visit of Prime Minister Narendra Modi to the UAE.
