Many Indian exporters shifting to settle transactions with SL in INR
“Many of the Indian exporters are now shifting to Indian Rupees (INR) because of the cost effectiveness in settlements and the transaction will effect immediately within the same day compared to US$,” said Ravindra Kumar, Country Head of Sri Lanka for State Bank of India.
He was addressing businessmen both from Sri Lanka and India who dealt in import and exports between the two countries, conducted by the Ceylon Chamber of Commerce (CCC) under the theme ‘Indian Rupee denominated trade settlements between India and Sri Lanka.’
He said benefits of settlements denominated in INR includes shorter timelines, lower exchange costs and easier availability of trade credits and said the INR impact has also been much helpful to the tourism industry in Sri Lanka as well as to the Indian traveller who can pay their bills in INR here. Kumar noted that by designating INR as a legal currency in Sri Lanka will gain the country with much-needed liquidity support to help stabilize the economy further.
R.M. N. Jeewantha, Deputy General Manager (International, Treasury and Investment) Bank of Ceylon said INR is becoming a global currency and elaborated the importance of INR for business transactions between India and Sri Lanka. He revealed that 60 Nostro accounts have been opened to date and the Bank of Ceylon who opened the first account with the assistance of their branch in Chennai.
Jeewantha elaborating on the cost effectiveness of transactions with INR between Sri Lanka and India said, exporters can expect a better price from the bank as a result of reduced mark-up, fewer Nostro charge and since there is no intermediary like Singapore, the transaction cost is low.
He said the payments can be made within India via NEFT / RTGS at minimum cost. He further said it will reduce the exchange rate risk associated with currency volatility.
He also said that new and small level traders will get the opportunity to trade globally and will have a positive impact on the tourism sector as well. Jeewantha also said in order to promote growth of global trade and bring INR as a global trading currency, additional arrangements will be made for invoicing, payment and settlement of exports & imports in INR.
He said the Indian Rupee has many advantages; such as 24/7 settlement system, same time zone and immediate funding arrangement, none or a minimal cost for interbank settlement, covering almost all trading regions and the documentation is the same with other currencies.