Stakeholders assert that Tanzania and India may reduce their reliance on significant global currencies and foster a stable and productive commercial environment by promoting trade in local currencies. Recently, stated parties were invited to a consultation meeting hosted by the Indian Institute of Chartered Accountants in Tanzania.
They discussed the effects of the Rupee Nostro Account System in light of the recent announcement that both countries will begin trading in their respective national currencies. The discussion focused on a number of significant advantages, one of which was the reduction in dependence on hard cash.
Participants were encouraged by the system’s potential to lessen the need for continuing currency conversions and reliance on foreign exchange reserves.
According to Mr. Antaryami Sarangi, managing director of Bank of India in Tanzania, the system has significant potential for corporate organizations, which can effectively manage their foreign exchange balances and prevent exchange risks connected with shifting global currencies.
The use of this approach will benefit the banking industry as well. By giving businesses more flexibility and reducing their reliance on hard currency, banks might aid imports. This would simplify commercial procedures and raise the general effectiveness of cross-border transactions, the speaker stated.
According to Bank of Baroda managing director Aditya Narayan Singh, the agreement is expected to lower transaction costs, which will be beneficial for businesses of all sizes. “Settlement times can be significantly shortened and yield lower transaction costs by eliminating the need for constant currency conversions,” he said.
According to a news release posted on the website of the Indian High Commission in Dar es Salaam, the Reserve Bank of India (RBI) has eased the way for trade using local currencies by allowing authorized Indian banks to establish Special Rupee Vestro Accounts (SRVA) in Tanzania.
To use this approach for trading, Tanzanian banks must open an SRVA account in India. They must then approach licensed Indian banks, who will then submit information regarding the agreement to RBI for approval.
Currently, Tanzania and India have close to $4.5 billion in bilateral trade.
