New Delhi, October 10: The Reserve Bank of India (RBI) has announced that Authorised Dealer (AD) banks in India and their overseas branches may now extend loans in Indian Rupees (INR) to residents and banks in Nepal, Bhutan, and Sri Lanka to support cross-border trade. The central bank said that necessary regulatory amendments under the Foreign Exchange Management Act will be issued soon to formalise the provision.

The RBI stated that the move aims to promote the settlement of cross-border transactions in INR and local currencies, ensuring greater liquidity and accessibility of the Indian Rupee in neighbouring countries. Major banks such as the State Bank of India (SBI), ICICI Bank, HDFC Bank, and Axis Bank are among those expected to offer INR-denominated loans to Nepali, Bhutanese, and Sri Lankan entities.

According to The Economic Times, the policy aligns with global efforts to diversify trade settlement mechanisms. India remains Nepal’s largest trading partner, accounting for over 60% of its international trade. In the fiscal year 2024/25, Nepal exported goods worth Rs 224.68 billion to India and imported goods valued at around Rs 1,071.19 billion, underscoring the significance of bilateral trade between the two countries. The RBI’s decision is expected to strengthen financial integration and facilitate smoother trade across South Asia.