India to build its own international financing messaging system

The system will be similar to SWIFT (Society for Worldwide Interbank Financial Telecommunications), which is widely used globally to transfer funds and securities across borders

July 28, 2023

An expert committee of bankers is currently exploring various options for the system

The committee is expected to present its findings to the government by August

The committee is considering the RBI's existing platform, the Structured Financial Messaging System (SFMS), as a potential model for the new system

The government has encouraged banks to engage with the international trading community through Special Rupee Vostro Accounts (SRVAs

India is planning to establish its own international financing messaging system similar to SWIFT which is widely used globally to transfer funds and securities across borders, according to media reports. This move is part of the government’s larger strategy to internationalize the Indian currency and facilitate the settlement of bilateral trade in rupees.

An expert committee of bankers, including representatives from State Bank of India, Bank of Baroda, Bank of India, Central Bank of India, among others, is currently exploring various options for the system. The committee is expected to present its findings to the government by August. The committee will also identify the operational aspects and potential challenges of implementing such a system, including consultations with the Reserve Bank of India (RBI).

The committee is considering the RBI’s existing platform, the Structured Financial Messaging System (SFMS), as a potential model for the new system. Similar to SWIFT, SFMS enables secure communication within and between banks. The RBI’s 2022 Vision Document also suggested expanding the scope of SFMS to include providing membership/technology to other jurisdictions and creating a domestic payment system platform for other countries. This could lead to faster, more convenient, and cost-effective direct payment channels with these jurisdictions.

In efforts to promote trade using the Indian rupee, the government has encouraged banks to engage with the international trading community through Special Rupee Vostro Accounts (SRVAs). Currently, 92 SRVAs have been opened by 20 banks from 22 countries, including Bangladesh, Germany, and Russia.

In addition, the RBI and the Central Bank of UAE recently signed an agreement to allow exporters and importers to invoice and pay in their respective domestic currencies, fostering the development of a bilateral foreign exchange market. This move further supports India’s initiatives to boost trade and the internationalization of its currency.

Source: Economic Times

Recent Articles

India eyes US$100 billion trade milestone with Russia by 2030

July 19, 2024

According to the Global Trade Research Initiative (GTRI), India’s goal …

Read More

Govt. to highlight digital achievements in Economic Survey 2023-24

July 19, 2024

Finance Minister Nirmala Sitharaman will present the Economic Survey of …

Read More

India aims for 50% boost in annual foreign direct investment

July 19, 2024

India is actively striving to boost its annual foreign direct …

Read More