Reserve Bank of India (RBI) in its Annual Report for 2023-24 highlightedAction Plan for promoting internationalisation of INR, i.e.

• Permitting opening of INR account outside India by persons resident outside India (PROI);
• INR lending by Indian banks to PROI; and 
• Enabling Foreign Direct Investment and Portfolio Investment through Special Non-Resident Rupee (SNRR) and Special Rupee Vostro Account (SRVA).

Internationalisation of Rupee 

• It refers to use of rupee in cross-border transactions.
• To be accepted as an International currency, INR should be widely used in International transactions, easily convertible and country should have a stable financial market.

Benefits of Internationalisation of Rupee

• Reduces dollar demand and strengthens INR.
• Reduces cost of doing business and improves their competitiveness.
• Reduced need for holding foreign exchange reserves.
• Reduced Vulnerability to External Shocks.

Challenges in Internationalisation of Rupee

• INR is not fully convertible.
• Triffin dilemma i.e. Obligation of country to supply its currency to meet global demand can conflict with its domestic monetary policies.
• Integration of financial markets could affect macroeconomic stability.

Steps taken for Internationalization of Rupee

• Usage of Indian payment infrastructure in foreign countries like Singapore, Malaysia etc.
• Bilateral Currency Swap agreements with countries like Japan, Sri Lanka, Bhutan etc.
• Issuance of rupee-denominated bonds i.e. Masala bonds.