RBI approves India, Sri Lanka trade settlement in rupee outside ACU

Regulatory nod only for State Bank of India's term loan of $1 billion for island nation battling economic crisis.

The Reserve Bank of India (RBI) has approved trade transactions between India and Sri Lanka to be settled in Indian rupee outside the Asian Clearing Mechanism.

The approval is alongside a government-guaranteed $1 billion term loan from State Bank of India (SBI) to the Sri Lankan government for purchasing essential goods from India.

India, On March 17, announced a term-loan facility for Sri Lanka as a part of its financial assistance to help the country to deal with its worst financial crisis in modern times.

“In view of the difficulties being experienced by exporters in receipt of export proceeds from Sri Lanka and