A social media post which shared the news of RBI introducing mechanism for international trade settlements in rupees is being widely shared. However, the post claims that in view of the new mechanism, there won’t be any dollar transactions. Through this article let’s fact-check the claim made in the post.
Claim: No more dollar transactions in international settlements, as RBI introduced rupee settlement mechanism.
Fact: RBI through a notification has asked the authorised banks to setup an additional mechanism to settle international trade in rupees. However, the existing mechanism of settling trade in dollar/other currency is still in place and the new mechanism is just an additional setup to the existing payment mechanisms. There are no reports of RBI discontinuing with the existing dollar/euro payment mechanisms. Hence the claim made in the post is MISLEADING.
The Reserve bank of India on 11 July 2022 through a notification has put in place a mechanism for settling the international trades in Indian rupees. As per RBI, the move is envisaged ‘to promote growth of global trade with emphasis on exports from India and to support the increasing interest of global trading community in INR’.
However, the notification categorically mentions that it is an additional setup, which implies that the existing mechanism of dollar/other currency settlements are still in place and the latest move is an addition to the existing mechanisms. News article which reported RBI notification related to news mechanism can be read here and here.
Further, RBI neither in this notification nor on any other instance mentioned about discontinuing the existing mechanism of dollar settlements in international transactions.
Earlier in June 2022, in the wake of the Russia-Ukraine conflict, the Indian government has proposed to settle the Russian trade in rupees.
To sum it up, RBI did not discontinue the existing dollar/euro payment mechanisms for international trade. The rupee mechanism is just an additional setup.
