Page 53 - Banking Finance August 2022

RBI CIRCULAR

RBI

CIRCULAR

Board approved Loan Policy – 1. In order to promote growth of global trade with
emphasis on exports from India and to support the
Management of Advances - UCBs
increasing interest of global trading community in INR,
RBI/2022-23/93 it has been decided to put in place an additional
arrangement for invoicing, payment, and settlement
July 26, 2022
of exports / imports in INR. Before putting in place this
mechanism, AD banks shall require prior approval from
1. Please refer to para 1 of the Master Circular
the Foreign Exchange Department of Reserve Bank of
DOR.CRE.REC.No.17/13.05.000/2022-23 dated April 8,
India, Central Office at Mumbai.
2022 on Management of Advances – UCBs in terms of
which, UCBs are required to lay down, with the 2. The broad framework for cross border trade
approval of their boards, transparent policies and transactions in INR under Foreign Exchange
guidelines for credit dispensation, in respect of each Management Act, 1999 (FEMA) is as delineated below:
broad category of economic activity, keeping in view a) Invoicing: All exports and imports under this
the credit exposure norms and various other guidelines arrangement may be denominated and invoiced in
issued by Reserve Bank from time to time. Rupee (INR).
2. It has been observed in several UCBs that these policies b) Exchange Rate: Exchange rate between the
not only lack comprehensive coverage, but also do not currencies of the two trading partner countries
require a periodic review. In order to ensure that the may be market determined.
loan policy reflects approved internal risk appetite and c) Settlement: The settlement of trade transactions
remains in alignment with the extant regulations, it is under this arrangement shall take place in INR in
advised that the loan policy of the bank shall be accordance with the procedure laid down in Para
reviewed by the Board at least once in a financial year. 3 of this circular.
3. The above instructions will come into effect 3. In terms of Regulation 7(1) of Foreign Exchange
immediately. Management (Deposit) Regulations, 2016, AD banks in
India have been permitted to open Rupee Vostro
(Manoranjan Mishra) Accounts. Accordingly, for settlement of trade
Chief General Manager transactions with any country, AD bank in India may
open Special Rupee Vostro Accounts of correspondent
International Trade Settlement in Indian bank/s of the partner trading country. In order to allow

Rupees (INR) settlement of international trade transactions through
this arrangement, it has been decided that:
RBI/2022-2023/90
a) Indian importers undertaking imports through this
July 11, 2022 mechanism shall make payment in INR which shall

BANKING FINANCE | AUGUST | 2022 | 53