RBI allows settlement of trade transactions with Sri Lanka in INR

MUMBAI: In view of difficulties being faced by exporters in getting payments from crisis-hit Sri Lanka, the Reserve Bank of India (RBI) on Thursday allowed settlement of trade transactions in Indian rupee outside the Asian Clearing Union (ACU) mechanism.

In March, the government had guaranteed a term loan of USD 1 billion extended by the State Bank of India (SBI) to Sri Lanka for financing purchase of essential goods by the island nation from India.

“In view of the difficulties being experienced by exporters in receipt of export proceeds from Sri Lanka and

SBI’S credit facility...it has been decided that such trade transactions with Sri Lanka, falling under the said arrangement, may be settled in INR outside the ACU mechanism,” the Reserve Bank of India said in a circular.

Under the arrangement, financing of export of eligible goods and services from India would be allowed subject conditions and whose purchase may be agreed to be financed by State Bank of India under the agreement.

Sri Lanka is facing its worst economic crisis since gaining independence from Britain in 1948.