New Delhi, Sep 7 (PTI) Reserve Bank and the finance ministry on Wednesday asked top management of banks and representative of trade bodies to push exports and import transactions in rupee.

It was stressed during a meeting that banks should connect with their foreign counterparts for opening special rupee vastro accounts to facilitate cross-border trade in Indian currency rather than popular mode dollar, sources said.

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Trade associations and their foreign trading partners should explore opportunities to make use of the framework, sources added.

The meeting, which saw participation from various stakeholders, including officials of external affairs and commerce ministries, Indian Banks' Association, urged embassies abroad to promote the mechanism through diplomatic channels.

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According to sources, countries like Sri Lanka, Argentina and Zimbabwe may be interested in settling bilateral trade in rupee.

RBI in July issued a detailed circular asking banks to put in place additional arrangements for export and import transactions in Indian rupees in view of increasing interest of the global trading community in the domestic currency.

The announcement by the Reserve Bank of India (RBI) to allow cross-border trade transactions in rupee is a timely move and a step towards internationalisation of the currency.

Currently, a large part of bilateral trade between India and Russia is getting settled in rupee due to sanctions imposed by the US and Europe following Moscow's attack on Ukraine.

The RBI had said for settlement of trade transactions, the concerned banks will require special rupee vostro accounts of correspondent banks of the partner trading country.

"Indian importers undertaking imports through this mechanism shall make payment in INR which shall be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller/supplier," it had said.

Exporters undertaking overseas shipments of goods and services through this mechanism will be paid the export proceeds in Indian rupees from the balances in the designated special vostro account.

As per the circular, the rupee surplus balance held can be used for permissible capital and current account transactions in accordance with the mutual agreement.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)