(HT)
India’s central bank is taking another step to internationalise the rupee, seeking approval to allow domestic banks to lend the currency to overseas borrowers for the first time, two people aware of the matter said.
The Reserve Bank of India (RBI) has asked the federal government to allow domestic banks and their foreign branches to lend Indian rupees to overseas borrowers to enhance the use and acceptability of the local currency in trade.
The proposal, sent to the finance ministry last month, suggests lending in rupees to non-residents can begin in neighbouring countries such as Bangladesh, Bhutan, Nepal and Sri Lanka, the people said.
If successful, such rupee-denominated lending could be extended to cross-border transactions globally, one of the perosns said.
According to Ministry of Commerce data, 90% of India’s exports to South Asia were to these four nations in 2024/25, amounting to nearly $25 billion.
Currently, foreign branches of Indian banks are restricted to providing loans in foreign currencies and such loans are mainly given to Indian firms.
The people declined to be identified as the discussions are confidential. Emails sent to the Finance Ministry and the RBI requesting comment did not receive a response.
The central bank has been taking steps to increase the use of the local currency in global trade and investment.
