RBI Deputy Governor Rohit Jain has advocated for increased use of local currencies in cross-border trade to reduce transaction costs and currency risks. With India’s forex reserves reaching $691 billion, the central bank is focused on long-term market evolution and digital integration. The RBI also issued a stern warning against unauthorized online forex trading platforms, urging investors to follow regulatory norms.
The Reserve Bank of India (RBI) is pushing for a broader adoption of local currencies in international trade, a strategic move aimed at lowering transaction expenses and minimizing the risks associated with currency fluctuations. RBI Deputy Governor Rohit Jain, speaking at a recent event organized by the Foreign Exchange Dealers' Association of India (FEDAI), emphasized that the shift is necessary to improve the efficiency of trade settlements.
At the core of this initiative is the Special Rupee Vostro Account (SRVA) framework. This system allows Indian businesses to invoice, pay, and settle international trade deals in rupees rather than relying solely on major foreign currencies like the U.S. dollar. For businesses, this can mean lower conversion costs and a more streamlined payment process, provided the system gains wider commercial acceptance.
The push for local currency usage comes against the backdrop of a stronger financial position for the country. India’s foreign exchange reserves have grown significantly, standing at approximately $691 billion as of 2026. Additionally, the average daily turnover in the domestic foreign exchange market—covering both spot and derivatives—has reached around $80 billion. These figures indicate a mature and deep market capable of handling complex international trade needs.
Despite this growth, the central bank has highlighted areas that need improvement. Jain pointed out that public sector banks need to play a more active role in the forex derivatives market, particularly in helping smaller businesses and micro, small, and medium enterprises (MSMEs) navigate currency risks. Currently, their participation is considered low relative to their overall balance sheet size, which limits the options available to smaller firms outside major metropolitan areas.
Investors and market participants should also be aware of the RBI’s specific warning regarding unauthorized online forex trading platforms. The central bank has observed a rise in entities operating outside the regulations of the Foreign Exchange Management Act (FEMA). These platforms often attract customers with promises of high returns or ease of access but operate without proper authorization, putting individual investors at risk of fraud. The RBI has advised both banks and customers to remain vigilant and avoid these unauthorized channels.
Looking ahead, the central bank expects the foreign exchange market to become increasingly digital. From the start of a transaction to the final reporting, the process is expected to move toward a fully paperless model. The integration of artificial intelligence and machine learning is likely to play a bigger role in tasks like detecting anomalies and classifying documents. Investors and stakeholders should track how quickly banks adopt these technologies and how effectively the SRVA framework is implemented in actual trade volumes across various sectors.