The Reserve Bank of India (RBI) should make a conscious effort to internationalise the Indian currency rupee amid disruptions in payments caused by the ongoing Russia-Ukraine war, said SBI Research in a report on Thursday.
It is a good opportunity to insist on export settlement in rupee, beginning with some of the smaller export partners, the report said.
A currency can be termed “international” if it is widely accepted across the world as a medium of exchange.
It also welcomed the central RBI’s recent measures on external commercial borrowings and foreign portfolio investment inflows in the debt segment, saying it will widen the market.
On credit growth, SBI Research said that it has expanded at Rs 2.6 lakh crores far outstripping bank deposit growth at Rs 1.04 lakh crore in the current year.
“The continued growth in bank credit is a matter of comfort and indicates that Indian economy is still navigating through the turmoil rather well. There are several aspects of this credit growth,” it said in a report.
Further, it said that utilization of working capital by various sectors has been adversely impacted across sectors that are specifically linked to the geopolitical tensions.
Those sectors include petroleum, power, engineering, and cement.
“The good thing is that some of the consumer-facing sectors like leather, food processing did not witness a material decline in working capital utilisation. Even sectors like pharmaceuticals and new age sectors like healthcare did witness holding on to higher working capital utilisation limits,” the report added.