New Delhi:India is taking steps to internationalize the Indian Rupee by allowing loans to be issued in rupees through the overseas branches of Indian banks. The Reserve Bank of India (RBI) has sought central government approval for this initiative. This would be the first time loans are made available in rupees outside India. The primary aim is to promote the use and acceptance of the rupee in international trade.
RBI has proposed starting this initiative in South Asian countries like Bangladesh, Bhutan, Nepal, and Sri Lanka — nations that account for about 90% of India’s trade in the region, according to the Ministry of Commerce. If successful, the program could be expanded to other countries.
Currently, Indian banks abroad face restrictions and generally provide loans in foreign currencies, mainly to Indian entities. Allowing rupee-denominated loans to local consumers in these countries could reduce dependence on foreign currencies and streamline trade settlements in rupees.
This move follows an earlier RBI decision permitting overseas Indians to open rupee-denominated accounts in foreign branches of Indian banks, another step towards boosting the rupee’s global utility.
