The Indian High Commission in Colombo has announced the use of Indian rupees for cross-border transactions with Sri Lanka, allowing for tourism accounts and the potential for expanding to trade and capital transactions. The Bank of Ceylon, State Bank of India and Indian Bank have all started Vostro/Nostro accounts in Indian rupees after the Reserve Bank of India (RBI) and the Central Bank of Sri Lanka enabled the process in 2022.
Representatives of banks participating in a forum have praised the faster INR settlement and lower costs. The tourism and hospitality industry’s positive impact was also highlighted, with increased collections able to be utilised by other sectors.
Sri Lanka’s central bank Governor, Nandalal Weerasinghe, expressed strong interest from both Indian and Sri Lankan business communities for trade settlements in Indian rupees. He has called for expanding the facility over time to include all capital and current account transactions.
During an online discussion, a team from RBI indicated the possibility of settling current and permitted capital account transactions. The Indian High Commission stated that the initiative would have a beneficial impact on the economic relationship between the two nations, with the potential for increased trade and investment opportunities.
Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.