The Reserve Bank of India (RBI) should make a conscious effort to internationalize the Indian rupee amid disruptions in payments due to the ongoing war between Russia and Ukraine, SBI Research said in a report on Thursday.
It’s a good opportunity to push for rupee export settlement, starting with some of the smaller export partners, the report said.
A currency can be called “international” if it is widely accepted as a medium of exchange around the world.
It also welcomed the central RBI’s recent moves on external commercial lending and inflows of foreign portfolio investment in the debt segment, and said it will broaden the market.
On credit growth, SBI Research said that in the current year at Rs 2.6 lakh crore, it far exceeds the growth of bank deposits by Rs 1.04 lakh crore.
“The continued growth of bank credit is a matter of comfort and indicates that the Indian economy is still navigating quite well through the turmoil. There are several aspects of this credit growth,” it said in a report.
It further said that the use of working capital by various sectors has been negatively impacted in sectors specifically linked to the geopolitical tensions.
Those sectors include petroleum, energy, engineering and cement.
“The good thing is that some of the consumer-oriented sectors, such as leather and food processing, have not seen a material decline in the use of working capital. Even sectors such as pharmaceuticals and new age sectors such as healthcare have witnessed the sticking to higher limits for the use of working capital,” the report added.