RBI to allow opening of rupee account outside India to boost currency use

The Reserve Bank of India (RBI) on Thursday allowed the opening of rupee accounts outside India as part of its strategic action plan to internationalise the domestic currency.

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 said it has finalised a strategic action 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.

The RBI will permit opening of rupee (INR) accounts outside India by persons resident outside India (PROIs) as part of the 2024-25 agenda for internationalisation of the domestic currency.

"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)," the report said.

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 rationalisation of regulations towards promoting the internationalisation of the INR was undertaken to enable the settlement of bilateral trade in local currencies.

Going forward, it 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.