11:45 AM IST – State Bank of India (SBI) is preparing to help businesses in India and Israel settle their trade directly in Indian rupees (INR). This means exporters and importers will no longer need to depend only on the US dollar for payments between the two countries.
The development was reported by Business Standard and has received approval from the Reserve Bank of India (RBI). The arrangement will work under the RBI’s Special Rupee Vostro Account (SRVA) system, which was introduced in July 2022.
So far, most trade between India and Israel has been settled in US dollars, even though neither country uses the dollar at home. Under the new system, trade payments can be made and received in Indian rupees.
SBI’s Tel Aviv branch, which is the only Indian bank branch operating in Israel, will handle these transactions. Israeli banks will open rupee accounts with SBI, and payments for imports and exports will be routed through these accounts.
In practice, it is a simple shift. Trade payments will be settled in rupees through SBI. The dollar is no longer needed in between. This reduces conversion costs and saves time.
Why This Matters for Businesses
Trade between India and Israel (excluding defence) is estimated at around USD 10–11 billion per year. This includes diamonds, chemicals, electronics, agriculture products, and technology services.
When trade is settled in dollars, businesses face extra costs, longer settlement time, and currency risk. Rupee-based settlement reduces these problems. For Indian exporters especially, this means faster payments and lower foreign exchange charges.
This step also comes at a time when India and Israel are discussing a Free Trade Agreement (FTA). Moving trade settlement to local currency usually shows that both countries are serious about building deeper and more stable economic ties.
Impact on Indian Workers in Israel
The decision is not only about trade. More than 40,000 Indian workers are currently employed in Israel, mainly in construction, caregiving, and technical jobs. SBI is also working to make it easier for these workers to open NRI accounts and send money back to India in rupees.
This can reduce delays and make remittances smoother for families back home.
What It Means Globally
For the Indian government and RBI, the idea is simple. Use the rupee more in foreign trade. Start with countries that have stable ties with India. This helps cut dollar use and reduces settlement risk. The idea is not to replace the US dollar overnight, but to give businesses another reliable option.
The India–Israel rupee trade arrangement is important because it is not driven by crisis or pressure, but by long-term cooperation. It shows how countries are slowly changing how global trade works — step by step.
For Indian exporters and banks, this move is about lower costs, less risk, and better control over payments. And that is why this development matters more than it may first appear. For policymakers, it is another step toward giving the rupee a bigger role in international trade. And for SBI, it gives its position as India’s main banking channel in strategic overseas markets.
