Sri Lankan Finance Minister Shehan Semsinghe and India’s High Commissioner to Sri Lanka Gopal Baglay. Photo: Twitter/@shehansema
India and Sri Lanka are exploring the possibility of using the Indian Rupee for economic transactions and have discussed this initiative which will help build a stronger and closer partnership between the two countries through trade and investment-based measures.
The High Commission of India here organized a discussion on the use of Indian Rupee (INR) for transactions between India and Sri Lanka on 2 March.
“Representatives from Bank of Ceylon, State Bank of India and Indian Bank shared their experiences and informed the audience that they have started doing INR-denominated trade transactions through respective Vostro/Nostro accounts after creation of enabling framework by the Reserve.” Bank of India [RBI] and Central Bank of Sri Lanka [CBSL] in 2022,” the High Commission said in a statement.
Participating banks also highlighted the advantages of settlement in INR which include shorter timelines, lower exchange costs and easier availability of trade credit.
The initiative’s beneficial impact on the tourism and hospitality industry was also highlighted, including its role in helping raise collections that could be used by other sectors.
India’s High Commissioner to Sri Lanka Gopal Baglay highlighted the positive impact that the initiative will have in joint efforts to build a stronger and closer economic partnership between the two countries through trade and investment led measures.
Sri Lankan Finance Minister Shehan Semasinghe appreciated the close economic ties between the two countries and the financial and humanitarian assistance extended by India over the past year, including the strong funding assurances provided by New Delhi in the context of the IMF assistance program for Sri Lanka Are included. ,
India extended Help Gave over $3.8 billion to Sri Lanka last year to help it deal with the economic crisis.
CBSL Governor Dr. P. Nandlal Weerasinghe highlighted the strong desire between the Indian and Sri Lankan business communities to enable trade settlement in INR.
He called for expanding this facility from time to time to use it for the full range of capital and current account transactions. He also appreciated the wide participation of stakeholders in Sri Lanka and India, which included over 300 attendees in physical format, apart from those who joined online, according to a report. island Newspaper.
“A team from RBI joined the discussion in online format and indicated the possibility of settlement of current account transactions in goods and services in INR, in addition to the option of permitted capital account transactions. The RBI team noted the close cooperation with CBSL and the commitment of RBI to take this process forward.
Sri Lanka was dealt an unprecedented blow Financial Crisis In 2022, the worst since its independence from Britain in 1948, sparking a severe depletion of foreign exchange reserves Political upheaval In the country who ousted the all-powerful Rajapaksa family.
IMF in September last year allowed Sri Lanka’s $2.9 billion bailout package is pending for Sri Lanka’s ability to restructure its debt with creditors – both bilateral and sovereign bondholders – over 4 years. With the assurance of creditors, the $2.9 billion facilities could get IMF board approval in March.