Sri Lanka can settle USD1Bn loan in INR, says Reserve Bank of India

COLOMBO (News 1st); The Reserve Bank of India (RBI) has approved transactions between India and Sri Lanka to be settled in Indian rupees outside the Asian Clearing Mechanism.

The approval has been granted alongside a government-guaranteed $1 billion term loan from State Bank of India (SBI) to the Sri Lankan Government for purchasing essential goods.

“In view of the difficulties being experienced by exporters in receipt of export proceeds from Sri Lanka and State Bank of India’s credit facility agreement dated March 17, 2022 with the Government of Sri Lanka for sanction of Government of India guaranteed USD 1000 million term loan to the latter for financing purchase of essential goods by Sri Lanka from India, it has been decided that such trade transactions with Sri Lanka, falling under the said arrangement, may be settled in INR outside the ACU mechanism,” RBI mentioned in a release.