"We have the proposal of Euroclear and Clearsteam settlement. There is a budget announcement also on international settlement. So, we are working on it to see how we can balance between the loss of liquidity in the local market as well as providing ease of trading for overseas investors," he told reporters on the sidelines of a Ficci event.
However, he did not offer a timeline for this.
He said to start with only settlement of government bonds will be allowed on the international system.
"We cannot open (the ECB window) fully given the current situation. The Sahoo committee has made certain recommendations and we are looking at that. It is not that we will open in a big bang way but there is scope for simplification," he said.
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He said being a resource-scarce country there is a need to have a balance between resource scarcity and macroeconomic stability.
Khan also said RBI is looking at more liberalisation under the automatic foreign direct investment route.
"There is no restriction on dividend or royalty repatriation. We have some restrictions on borrowings as we have to manage our capital account. So capital account not fully convertible is not a cause for FDI not flowing into the country," Khan said.
Talking about building forex reserves, the deputy governor said reserves can act as a safe insurance in case there is no multilateral shock absorbers, and if one is not sure what is going to happen in future.
"Building forex reserves has 3 'I' effects-- you have insurance against future rainy day, your intervention capability increases and image, the showcase effect of having reserves that has fully impact in the market," he said, adding the country has increased the reserves by USD 40 billion so far year-on-year.