Reserve Bank today allowed dealers in foreign exchange to settle border trade between Myanmar and India in any permitted currency.
The new directive is a shift from barter trade to normal trade at the Indo-Myanmar border and will be effective from December 1.
As per extant norms, the border trade between Myanmar and India was allowed to be settled through barter system.
"Further, in terms of Regulation (FEMA)...As amended from time to time, the trade transactions with Myanmar may be settled in any permitted currency in addition to the Asian Clearing Union mechanism," RBI said in a notification.
RBI said the barter trade was initially permitted to facilitate exchange of locally produced commodities along the Indo-Myanmar border.
As such, these transactions were not captured in the banking system or reflected in the trade statistics.
However, over a period of time the trade basket has diversified and adequate banking presence is in place to support normal trade with Myanmar, RBI said.
"It has, therefore, been decided, in consultation with Government, to do away with the barter system of trade at the Indo-Myanmar border and switch over completely to normal trade with effect from December 1, 2015," it added.
Accordingly, all trade transactions with Myanmar, including those at the Indo-Myanmar border with effect from December 1, 2015 would be settled in any permitted currency in addition to the Asian Clearing Union mechanism, said the notification.
