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.

Answer: The policy is not aimed at any specific country. This step is part of a sequenced and calibrated path for increased use of the INR in international transactions.

Answer: The balance in Special Rupee Vostro Account (SRVA) can be repatriated in freely convertible currency and/or currency of the beneficiary trading partner country depending on underlying transaction i.e. for which the account was credited. For example, for import payments through SRVA like any Rupee Vostro account the fund can be remitted to overseas exporter either in freely convertible currency or in domestic currency of the overseas exporter.

Answer: Yes, the income from INR balance can be repatriated subject to applicable regulatory guidelines and tax provisions.

Answer: Balance in SRVA is like foreign exchange inflow converted into INR, hence balance can be used for any permissible current and capital account transaction under the present FEMA framework.

Answer: Investment in Government Treasury Bills, Government securities is permitted in terms of extant guidelines and prescribed limits. Other than these, avenues of investments can be mutually agreed between the countries subject to compliance with applicable regulatory and statutory guidelines.

Answer: Balance of one Special Rupee Vostro Account (SRVA) can be transferred to SRVA of another bank of the same country only. Transfer from SRVA to Rupee Vostro account of same country is allowed but not vice-versa.

Answer: Yes, INR exposure can be hedged in terms of applicable guidelines depending upon underlying transactions.

Answer: No.