SBI Plans Indian Rupee Deposits in Sri Lanka to Support Trade

The State Bank of India (SBI) announced plans to introduce Indian rupee-denominated deposits in Sri Lanka this week, aiming to boost the use of the Indian currency in bilateral trade and investment. This initiative is part of a broader effort by India to promote the rupee as an international currency. SBI, which is India's largest public sector bank, will offer these rupee deposits through its branches in Sri Lanka. The move is expected to facilitate easier transactions for Indian businesses operating in Sri Lanka and for Sri Lankan entities engaged in trade with India. By providing a local avenue for rupee deposits, SBI seeks to reduce reliance on other major currencies like the US dollar for trade settlements. This development follows India's central bank, the Reserve Bank of India (RBI), establishing a special Rupee Vostro account mechanism to enable international trade in Indian rupees. The RBI has been actively encouraging the internationalization of the rupee since 2022, with several countries now permitted to conduct trade in Indian rupees. SBI's strategic move in Sri Lanka is anticipated to strengthen economic ties and potentially increase the flow of Indian investment into the island nation.