In 2022, the RBI decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in Rupee.

Reserve Bank of India Governor Shaktikanta Das has said that there is no such thinking to move towards de-dollarisation and clarified that the efforts of the central bank towards internationalization of the rupee are not aimed at replacing the dollar.

“There is no such thinking to move towards de-dollarisation... The dollar will continue to be the dominant currency and whatever we are doing for internationalization of the rupee, it is not to replace the dollar,” Das said at the World Economic Forum Annual Meeting 2024 at Davos on January 16.

“Dependence on one currency can be risky as the entire global trade will be subject to the volatility of that particular currency,” he mentioned.

An international currency is used and held beyond the borders of the issuing country for transactions between residents and non-residents and between residents of two countries other than the issuing country.

The internationalization of a currency is also closely interlinked with the nation's economic progress especially its prominence in global trade.

In 2022, the RBI had decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in the rupee. This was in order to promote the growth of global trade with an emphasis on exports from India and to support the increasing interest of the global trading community in the rupee.

The RBI permitted the opening of the rupee vostro accounts in the partner trading country.

Under this mechanism, Indian traders undertaking imports through this mechanism shall make payment in the rupee which shall be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller/supplier.

India in July signed an agreement with the UAE for rupee settlement and soon after Indian Oil Corporation (IOC) made payments for the purchase of a million barrels of crude oil from Abu Dhabi National Oil Company (ADNOC) in the rupee.

During a visit by Prime Minister Narendra Modi to the UAE, the two countries also agreed to set up a real-time payment link to facilitate easier cross-border money transfers. Some of the Russian oil imports too have been settled in the rupee.

The RBI governor at Davos further said that the Indian economy is growing. "We are becoming part of the international trade system in a bigger way or share of our international trade is also gradually and steadily increasing," he said.

“India has entered into new markets, new countries, new products, particularly in services, so we want to offer the rupee as an alternative currency for settlement of international payments or settlement of international trade,” Das said.