The State Bank of India (SBI) is gearing up to play a pivotal role in strengthening economic engagement between India and Israel by enabling trade settlements in Indian rupees. The initiative supports India’s broader objective of promoting the international use of the rupee and lowering dependence on the US dollar for cross-border transactions.
With an established branch presence in Israel, SBI is uniquely positioned to act as a key financial intermediary as bilateral trade and investment ties between the two nations continue to expand.
How Rupee-Based Trade Settlement Will Work
India’s banking regulator has permitted Indian banks to settle international trade transactions in Indian rupees with select partner countries. Israel has now been brought under this framework, allowing exporters and importers from both sides to invoice, pay, and receive funds directly in INR.
This system eliminates the need for dollar-denominated settlements, helping businesses reduce foreign exchange conversion costs and minimise risks arising from currency fluctuations.
SBI’s branch in Tel Aviv has secured the necessary regulatory clearances and has begun outreach initiatives to familiarise Israeli companies with the operational aspects of rupee-based settlements.
Trade and Defence Sectors in Focus
As part of its engagement strategy, SBI has been holding interactions, including webinars and meetings, in collaboration with the Israel–India Chamber of Commerce. Interest has been particularly strong among Israeli defence companies, many of which already have long-standing relationships with Indian government procurement agencies.
Apart from defence, sectors such as technology, agriculture, and infrastructure are expected to benefit significantly from the new settlement mechanism as trade volumes grow.
Growing Emphasis on Remittance Services
In addition to facilitating trade finance, SBI is expanding its focus on remittance solutions. More than 40,000 Indian nationals have recently taken up employment in Israel, primarily in construction and agriculture.
To cater to this rising workforce, SBI is enabling the opening of NRI accounts and exploring collaborations with fintech companies and local Israeli banks. The objective is to streamline remittance flows to India by making them quicker, more cost-effective, and easier to access.
Policy Support and Strategic Alignment
The push towards rupee-based trade settlement is backed by renewed diplomatic and economic momentum between India and Israel. Recent developments include high-level government engagements, the signing of a Bilateral Investment Treaty, and progress toward concluding a long-pending Free Trade Agreement (FTA).
As negotiations on the FTA advance, rupee-denominated trade is expected to serve both as a functional enabler of commerce and as a strategic signal of deeper economic integration between the two countries.
Summary
SBI’s move to facilitate rupee-based trade settlement between India and Israel marks an important step in advancing bilateral economic cooperation and promoting the global use of the Indian currency. By reducing reliance on the US dollar, lowering transaction costs, and supporting trade, defence collaboration, and remittances, the initiative strengthens financial connectivity between the two nations. Supported by policy momentum and growing commercial ties, rupee-denominated settlement could play a meaningful role in shaping the next phase of India–Israel economic relations.
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