INR Settlement

Payment

Trade settled in Indian Rupees rather than USD — India's push to internationalise INR for bilateral trade.

Sources

1. Reserve Bank of India — Master Direction – Export of Goods and Services, FED Master Direction No. 16/2015-16 (updated as on 17 July 2026) rbi.org.in accessed 23 September 2026

India’s rupee trade-settlement mechanism has a specific legal address. The Master Direction records that, following A.P. (DIR Series) Circular No. 10 of 11 July 2022 read with Circular No. 08 of 5 August 2025, “settlement of trade transactions in INR shall take place through the Special Rupee Vostro Accounts opened by AD banks in India as permitted under Regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016”. Indian importers pay INR into the partner bank’s Special Vostro account; Indian exporters are paid “in INR from the balances in the designated Special Vostro account of the correspondent bank of the partner country”. The Direction calls the SRVA route “an additional arrangement” — it sits alongside, and does not replace, settlement in freely convertible currency, and the general rule in Para 2.52 of the Foreign Trade Policy 2023 still stands: contracts may be denominated in rupees or in convertible currency, but proceeds are to be realised in convertible currency except where a route like this one applies.

What this source settles. The Reserve Bank of India’s Master Direction is a direction to Authorised Dealer banks under sections 10(4) and 11(1) of FEMA 1999. It settles what an AD bank in India may do and what an Indian exporter must do — not what the instrument means in general commercial use elsewhere. Where the entry above states a rule, it is India’s rule for an Indian transaction; the market practice behind the term is wider than the Direction and is not defined by it.

Related terms

• Currency Swap
• Escrow
• RTGS
• SEPA
• SWIFT MT103
• Telegraphic Transfer

From the AJG lexicon archive (July 2026).