International Trade Settlement in India Rupees

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..... nterest of global trading community in INR, it has been decided to put in place an additional arrangement for invoicing , payment, and settlement of exports / imports in INR. Prior Approval:- Before putting in place this mechanism, AD banks shall require prior approval from the Foreign Exchange Department of Reserve Bank of India, Central Office at Mumbai. Broad framework for cross border trade transactions in INR The broad framework for cross border trade transactions in INR under Foreign Exchange Management Act, 1999 (FEMA) is as delineated below: Invoicing : All exports and imports under this arrangement may be denominated and invoiced in Rupee (INR). Exchange Rate: Exchange rate between the currencie .....

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..... tually between banks of the partner trading countries under the overall framework of Uniform Customs and Practice for Documentary Credits (UCPDC) and incoterms. Exchange of messages in safe, secure, and efficient way may be agreed mutually between the banks of partner countries. Advance against exports Indian exporters may receive advance payment against exports from overseas importers in Indian rupees through the above Rupee Payment Mechanism. Before allowing any such receipt of advance payment against exports, Indian Banks shall ensure that available funds in these accounts are first used towards payment obligations arising out of already executed export orders / export payments in the pipeline. The said permission would .....

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..... apital and current account transactions in accordance with mutual agreement. The balance in Special Vostro Accounts can be used for: Payments for projects and investments. Export/Import advance flow management Investment in Government Treasury Bills, Government securities, etc. in terms of extant guidelines and prescribed limits, subject to FEMA and similar statutory provision. Reporting Requirements Reporting of cross- border transactions need to be done in terms of the extant guidelines under FEMA 1999 . Approval from RBI for opening of Special INR VOSTRO account The bank of a partner country may approach an AD bank in India for opening of Special INR VOSTRO account. The AD bank will seek a .....

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