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RBI allows settlement of trade transactions with Sri Lanka in Indian rupee

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In view of difficulties being faced by exporters in getting payments from crisis-hit Sri Lanka, the 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 RBI 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 SBI under the agreement.


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


The crisis has been caused in part by a lack of foreign currency, which means the country cannot afford to pay for imports of staple foods and fuel, leading to acute shortages and very high prices.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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In view of difficulties being faced by exporters in getting payments from crisis-hit Sri Lanka, the 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 RBI 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 SBI under the agreement.


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


The crisis has been caused in part by a lack of foreign currency, which means the country cannot afford to pay for imports of staple foods and fuel, leading to acute shortages and very high prices.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

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