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RBI permitted use of INR for foreign commerce invoices and payments

Bhagwat Kisanrao Karad, the Union Minister of State for Finance, informed the Rajya Sabha that the Reserve Bank of India (RBI) has permitted foreign trade invoices and payments to be made in the Indian Rupee. By means of a circular titled International Trade Settlement in Indian Rupees (INR) that was published on July 11, 2022, the central bank has permitted payments for international trade in the Indian currency.

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  • According to Paragraph 10 of the Circular, the approval process is that banks from partner countries may approach Authorised Dealer (AD) banks in India who may seek approval from RBI with information about the arrangement for the opening of Special INR Vostro accounts.
  • In order to maintain the Special INR Vostro Account, the AD bank must make sure that the correspondent bank is not from one of the nations or regions listed in the most recent FATF Public Statement on High Risk & Non-Cooperative Jurisdictions, for which FATF has called for countermeasures.

Rise in the RBI’s Financial inclusion index:

  • The RBI’s composite financial inclusion index (FI-Index), which measures the level of financial inclusion throughout the nation, increased to 56.4 in March 2022, indicating development in all areas.
  • The index records data on different facets of financial inclusion in a single number ranging from 0 to 100, where 0 denotes total financial exclusion and 100 denotes complete financial inclusion.
  • The value of the FI Index for March 2022 is 56.4 compared to 53.9% in March 2021, with rise shown across all sub-indices, according to a statement from the RBI.
  • The central bank stated in August of last year that the index was conceptualised as a thorough one, including information on the banking, investments, insurance, postal, as well as the pension sector, in cooperation with the government and relevant sectoral regulators.
  • There was no “base year” when the FI-Index was created, it represents the combined efforts of all stakeholders over time toward financial inclusion.

Parameters that make Financial Inclusion Index:

  • The three broad parameters that make up the FI-Index are Access (35%) Usage (45%), and Quality (20%).
  • Each of these parameters has various dimensions and is calculated using a number of indicators.

Important Takeaways For All Competitive Exams:

  • Union Minister of State for Finance: Bhagwat Kisanrao Karad
  • Governor of RBI: Shaktikanta Das

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