RBI aims to increase the global acceptance of the rupee and relax regulations for non-residents

The central bank's plans for the ongoing fiscal year to globalize the rupee involve allowing non-Indian residents to open rupee accounts abroad, Indian banks providing rupee loans to non-Indian residents, and facilitating foreign direct investment and foreign portfolio investment via special non-resident rupee and special rupee vostro accounts.

The regulations for rupee accounts for non-residents under the Foreign Exchange Management (Deposit) Regulations are currently under review in collaboration with the government.

Steps are being taken to promote the international use of the Indian Rupee (INR) by conducting bilateral trade settlements in the local currency. RBI officials stated in the central bank's annual report for 2023-24 that to boost the internationalization of INR and facilitate local currency settlement with partner nations, regulations concerning INR accounts for non-residents need to be relaxed.

The central bank officials highlighted significant steps taken towards the rupee’s internationalization in December 2023 via the issuance of the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, which ushered in rationalized norms.

Amongst the major amendments include regulations that now enable receipt or payment in any foreign currency which would help in local currency settlement with partner countries.

The RBI has come up with another measure to speed up the rupee's internationalization by expanding the domestic SFMS to a global SFMS hub in other countries.

Interested countries have the option to link up their domestic messaging platform to the Global SFMS Hub to send cross-border payment messages in their local currencies. The RBI stated that this could assist India in decreasing reliance on other prominent trading currencies and in managing foreign exchange.