The Reserve Bank on Wednesday announced steps to lift the INR’s global role. It promoted rupee use in cross-border settlements and reduced dollar reliance. Governor Sanjay Malhotra outlined three measures supporting internationalising rupee. He also projected 6.8% GDP growth, with risks evenly balanced amid tariff tensions.
India’s external sector continues to display firm fundamentals. In Q1 2025-26, the current account deficit fell to USD 2.4 billion. That equalled 0.2% of GDP, down from USD 8.6 billion, or 0.9%. On September 26, 2025, reserves were USD 700.2 billion, covering over 11 months.
RBI INR internationalising rupee measures for settlements
Authorised Dealer (AD) banks can now lend in INR to non-residents. The permission applies to Bhutan, Nepal, and Sri Lanka. The step widens rupee use across neighbouring trade and financial flows. It supports settlement flexibility without converting exposures into US dollars.
RBI will publish transparent reference rates for major partner currencies. These rates are meant to ease INR-based settlement calculations. It also supports compliance and reduces disputes over benchmark selection.
Foreign banks can deploy SRVA balances in corporate bonds and commercial papers. SRVAs are accounts foreign banks maintain with Indian banks. They allow direct trade settlement in Indian Rupees. The broader use targets better liquidity and smoother INR-linked transactions. The aim is to limit currency swings and exchange rate risks.
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RBI INR internationalising rupee outlook and external sector
Malhotra said global trade uncertainties still affect merchandise trade. However, services and remittances strengthened external balances. “India’s services exports, driven by software and business services, witnessed robust growth in July-August 2025.” With healthy remittances, the CAD stayed on a sustainable path in 2025-26.
Malhotra acknowledged currency swings despite strong domestic conditions. He stated the following assessment. “Notwithstanding the robust domestic macroeconomic fundamentals, the INR has witnessed some depreciation accompanied by phases of volatility. RBI is keeping a close watch on movements of the INR and will take appropriate steps, as warranted,”
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RBI INR internationalising rupee policy rates and inflation
The Monetary Policy Committee kept the repo rate at 5.5%, with a neutral stance. Since February 2025, policy rates fell by a total of 100 basis points. February and April saw 25 basis points each. June delivered 50 basis points, tracking easier retail inflation. The table below summarises key policy and external metrics.
| Metric | Period/Date | Value | Notes |
|---|---|---|---|
| Current account deficit | Q1 2025-26 | USD 2.4 billion (0.2% of GDP) | From USD 8.6 billion (0.9%) a year earlier |
| Foreign exchange reserves | September 26, 2025 | USD 700.2 billion | More than 11 months of import cover |
| Repo rate | Latest | 5.5% | Neutral stance |
| Policy rate cuts | Feb, Apr, Jun 2025 | 100 basis points | 25+25+50 basis points |
These steps support broader rupee use and cushion currency shocks. They seek lower dollar dependence in trade and settlements. GST rate rationalisation and tariffs may slow H2 growth. Malhotra said the economy remains on a firm growth path.
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