Rupee trade mechanism: Banks wary of U.S. sanctions, says EEPC’s Garodia

Rupee trade mechanism: Banks wary of U.S. sanctions, says EEPC’s Garodia

• Early last year, the Reserve Bank of India had set up the International Trade Settlement mechanism in rupee to facilitate trade with countries under sanctions such as Russia
• There is a lack of clarity among banks about the International Trade Settlement mechanism in rupees (INR) and those with exposure to the U.S. are wary of sanctions, the Chairman of India’s Engineering Export Promotion Council (EEPC).
• Early last year, the Reserve Bank of India (RBI) set up the International Trade Settlement mechanism in rupee, a move aimed at facilitating trade with countries under sanctions such as Russia.
• The rupee trade settlement mechanism is yet to come up seamlessly. Banks, especially those who have offices or deal directly with the U.S. are scared of sanctions, this is the reason why they are not issuing e- Bank Realisation Certificates (BRC), which are required to complete the export transaction
• RBI and the banks need to arrive at an understanding to make the rupee trade mechanism seamless

Russia, largest market

• “Russia is the largest market in the region. Once rupee settlement becomes seamless, we are sure trade is bound to grow,”.
• We have also requested the Indian government to bring in the rupee settlement mechanism with other countries such as Sri Lanka, Bangladesh and other nations which are under U.S. sanctions or have issues relating to forex payment in hard currency.