Answer: The settlement of International trade through Indian Rupees (INR) is an additional arrangement to the existing system of settlement. 

Answer: The settlement through Indian Rupees (INR) is an additional arrangement to the existing system that uses freely convertible currencies and will work as a complimentary system. This will reduce dependence on hard (freely convertible) currency.

Answer: The term correspondent banking relationship acts as an intermediary or agent, facilitating wire transfers, conducting business transactions, accepting deposits and gathering documents on behalf of another bank. Correspondent banks are most likely to be used by domestic banks to service transactions that either originate or are completed in foreign countries. Domestic banks also use correspondent banks to gain access to foreign financial markets and to serve international clients without having to open branches abroad.

Answer: This is essentially a bank-to-bank arrangement similar to correspondent banking arrangement.

Answer: Yes, provided Indian branch of foreign bank is an AD bank. This is subject to approval of Reserve Bank as in the case of other such accounts.

Answer: No

Answer: Yes

Answer: No. AD bank in India can open multiple Special Rupee Vostro Accounts for different banks from the same country.

Answer: Exchange rate between the currencies of the two trading partner countries will be market determined.

Answer: The exchange rate for most currencies are determined in the Forex markets, typically against global currencies like the USD, EUR, JPY etc. In the transition phase, when there is no market with direct exchange rates between two currencies (say INR and Sri Lankan Rupee), the exchange rate between the currencies of two trading partner countries, each of which has markets against global currencies, would be derived as a cross currency rate.