The Reserve Bank of India on Wednesday announced fresh steps to increase the use of the Indian Rupee in cross-border trade, as part of its long-term goal of making the currency more widely accepted internationally.

The move is another step in India’s efforts to internationalise the rupee, a process aimed at giving the Indian currency greater recognition in global trade, finance and investment. “We have been making steady progress in this regard,” RBI Governor Sanjay Malhotra said.

Unveiling three new measures, Malhotra explained that the focus is on making the rupee stronger and more stable in global markets.

The first measure will allow authorised dealer banks to extend loans in Indian Rupees to non-residents from Bhutan, Nepal and Sri Lanka for trade-related transactions. The RBI expects this to make trade settlement in rupees deeper and more common with neighbouring countries. Commerce Ministry data shows that nearly 90 per cent of India’s exports to South Asia in 2024 to 2025 went to these three nations, valued at about 25 billion dollars.

The second step will see the RBI introducing transparent reference rates for the currencies of India’s major trading partners. This move is designed to make pricing more predictable and encourage the use of the rupee in invoicing and settlement of international trade.

“The objective is to minimise the use of crossing currencies to get rates. That’ll help both our currency and the other currency,” RBI Deputy Governor T Rabi Sankar said at a press conference. He mentioned that the Indonesian rupiah and the United Arab Emirates dirham are among the currencies being considered. “This is a case where the reference rate has to be shown first and the market has to pick up from there,” he said. Currently, the RBI publishes reference rates only for the US dollar, euro, Japanese yen and British pound.

The third measure will widen the use of balances in Special Rupee Vostro Accounts. These accounts, which are mainly used for settling trade in rupees, will now also be eligible for investment in corporate bonds and commercial papers. In August, the RBI had already allowed surplus vostro balances to be invested in government securities.

In recent years, the RBI has signed bilateral agreements for trade settlement in rupees, promoted Indian payment systems like UPI for cross-border transactions, and attempted to reduce volatility in the currency to make it more reliable and attractive for global investors and businesses.