Small, steady steps towards rupee’s internationalisation

The beginning of what could be a multi-decade journey has been made. It will be a slow process, not a hasty one that may cause disruptions

- TAMAL BANDYOPADHYAY

Since January 2026, the monthly Reserve Bank of India (RBI) Bulletin, brought out by the central bank’s Department of Economic and Policy Research, started featuring two tables on the invoicing and settlement of the country’s total exports and imports in rupees.

While the share of India’s total international trade that is settled in rupees stands at just around 5 per cent, the figure points to a move that can, over a period of time, transform the way the country does business with the rest of the world.

After Russia invaded Ukraine in February 2022, the United States not only froze all of Russia’s dollar assets, but also barred it from using SWIFT and blocked its access to the dollar payment and settlement system centred in New York. SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a secure global messaging network used by financial institutions across at least 200 countries to transmit instructions for international money and security transfers.

This led many countries, including India, to start exploring alternatives to the dollar and dollar-dominated payment and settlement system. The RBI set up an interdepartmental group (IDG), headed by Executive Director Radha Shyam Ratho, to prepare a roadmap for the internationalisation of the rupee. Its report, published in July 2023, is the first official public policy research on the subject.

Going by the IDG report, with the global order being rebalanced, the focus has to be on self-reliance. Against this backdrop, the rupee’s internationalisation assumes urgency. On April 1, 2024, Prime Minister Narendra Modi, in his address at the RBI@90 commemoration function in Mumbai, said the rupee should be accessible and acceptable throughout the world — in effect sending a signal to the central bank to continue with its work on the rupee’s internationalisation.