Sri Lanka’s Seylan Bank has opened an Indian rupee denominated Nostro account in Indian Bank in Mumbai.
The arrangement will help settle cross-border transactions using Indian rupee between the two nations. In a statement, the Sri Lankan bank said the initiative will enable local customers to enter into transactions denominated in Indian rupee, eliminating the need to conduct Trade and Remittance transactions in US dollars. India has been trying to increase Indian rupee based trade settlements, which will help the traders on both sides given shortages in Foreign Exchange. In an event to promote use of Rupee in settlement of transactions held earlier this month, the Indian High Commissioner had said that as a next step, mechanisms need to be created by which Indian tourists can pay in Indian rupees, enabling Sri Lanka to attract more tourists.
Sri Lanka’s banks have been opening Nostro accounts in India based banks. Likewise, banks from Indian side have maintained similar accounts in Sri Lanka for a reciprocal arrangement.
The state run Bank of Ceylon had carried out its first rupee settlement in December 2022 and has completed transactions over 1 crore rupees. Similarly, State Bank of India has started rupee settlements from this month, while Indian bank has been completing similar transactions from January this year.
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