What is RBI nudging India to do at BRICS? | Explained

To really get what the Reserve Bank of India is trying to tell India to do when it meets with the countries, at the BRICS platform we need to understand a few things first. We have to know these three things clearly:

So what is BRICS. BRICS is a group of countries that work together. These countries are Brazil and Russia and India and China and South Africa.

The main reason BRICS was created is to help these countries work together on things like trade and economics and politics.

BRICS was formed because these countries wanted to have say in the world and be more powerful. They also wanted to help each other out and work together to make their countries better.

The countries in BRICS are all big and important in their way. Brazil is a country in South America. Russia is a country in Europe and Asia. India is a country in Asia. China is also a country in Asia. South Africa is a country in Africa.

BRICS is important because it helps these countries to have a voice in the world. It also helps them to work on big issues like poverty and climate change.

So that is what BRICS is and why it was created. BRICS is a group of countries that work together to make their countries better and to have a voice, in the world.

What RBI’s role is in India’s international financial strategy

The global financial system is changing. It is happening slowly. This is because the global financial system is an complicated thing. The global financial system has a lot of parts that all work together.

The global financial system is changing in ways. For example people are using cash less and less. They are using payment methods instead. This is changing the way that money moves around the world.

The global financial system is also changing because of technologies. These new technologies are making it easier for people to send and receive money. They are also making it easier for people to invest in things.

People are talking about the financial system and how it is changing. They are trying to figure out what this means for the future. The global financial system is very important. It affects people around the world. That is why people are paying attention to the changes that are happening to the financial system.

The Reserve Bank of Indias push only makes sense at that point.

1. What is BRICS?

The BRICS countries are a group of emerging economies. The original members of the BRICS countries were:

Brazil

Russia

India

China

South Africa

The countries that’re part of BRICS they represent something important. BRICS countries are made up of nations, like Brazil and Russia and India and China and South Africa. Together BRICS countries represent a lot of people and a lot of land. BRICS countries have a lot of power and influence in the world. So when we talk about BRICS countries we are talking about Brazil and Russia and India and China and South Africa. These BRICS countries represent a part of the world.

Over 40% of the world’s population

Around 25–30% of global GDP

A large share of global trade, energy, and manufacturing

The BRICS group was made so that it could be a voice from the Western countries that have a lot of power in global institutions like

* The World Bank

* The International Monetary Fund

The BRICS group wants to give countries a say, in how things are run. The BRICS countries are tired of the countries making all the decisions. The BRICS group is a way for these countries to have a voice and be heard.

IMF (International Monetary Fund)

World Bank

SWIFT financial network

US dollar–centric trade system

For a time the global financial system has been controlled mostly by:

The United States

Europe

Their institutions and currencies

The BRICS countries want to change that balance. They think the current balance is not fair and the BRICS countries want to make some changes to it. The BRICS countries are trying to make a difference. They want to change the balance of power. The balance that the BRICS countries want to change is the one that’s not, in their favor.

2. Why the BRICS countries are becoming more important today. The BRICS countries are really becoming the center of attention these days. People want to know what is so special, about the BRICS countries. The BRICS countries are a group of countries that include Brazil and Russia and India and China and South Africa. These countries, the BRICS countries are coming together to make decisions that affect the whole world. The BRICS countries are working together to make their voices heard. That is why the BRICS countries are becoming more important today.

Things have been happening around the world and this has made the BRICS countries work together more quickly. The BRICS cooperation is really moving forward because of these global events. The BRICS countries are doing things together now.

Russia–Ukraine war

US sanctions on Russia

Freezing of Russian dollar reserves

Weaponisation of the US dollar

Trade restrictions on China

Rising dissatisfaction of developing nations

These events showed one reality: things are not always what they seem to be. The things that happened made it very clear that life is full of surprises. These events showed one reality: we have to be ready, for anything.

If your countrys reserves and trade rely on the US dollar then your economy is at risk because of decisions made by politicians. This means that Western political decisions can have an impact, on your economy. The US dollar plays a role in your countrys economy so you have to think about what Western politicians do.

This has made many countries search for things, like this. They are really looking for it. Many countries are doing this because they want to find what they are looking for. The search is on. Many countries are searching for this thing.

Alternative payment systems

Non-dollar trade settlements

Financial sovereignty

The BRICS nations are coming together to create a system for the world economy and this system is really different from what we have now. The BRICS is becoming a place where people can talk about and work on this way of doing things with money around the world. This new system is an alternative to what we have and the BRICS is, at the center of it.

3. What is RBI’s Role?

The Reserve Bank of India is:

India’s central bank

Guardian of rupee stability

Manager of forex reserves

Designer of payment systems

Architect of financial security

The Reserve Bank of India does not make policy but the Reserve Bank of India shapes things in a big way. The Reserve Bank of India has a lot of influence on how things work out.

* The Reserve Bank of India is really important when it comes to money and trade with countries.

The Reserve Bank of India plays a role in deciding what happens with money that comes from outside the country. The Reserve Bank of India is very important, in this area.

India does a lot of trading with countries. The way India trades is very interesting. India trades things like food and clothes. India also trades with its neighbors. The main things that India trades are textiles and spices. India has been trading for a long time. India trades by sea and by land. The people of India are very good, at trading. India trades to make money and to get things it needs. India is a country and it trades a lot.

India takes a lot of steps to protect its currency.

The Indian government does this to keep the value of the rupee stable.

India has a team that watches the currency market every day.

This team is part of the Reserve Bank of India.

The Reserve Bank of India is like a bank for all the banks in India.

* The Reserve Bank of India controls how much money is printed and put into the market.

* It also decides the interest rate at which people can borrow money from banks.

India protects its currency by doing these things to keep the economy strong.

The Indian government and the Reserve Bank of India work together to protect the rupee.

They do this so that India can do business with countries easily and people in India have a good life.

India wants to keep its currency safe, from people who might try to manipulate its value.

So the Reserve Bank of India and the Indian government are always watching the currency market to protect the rupee.

India handles payments in a pretty straightforward way.

When it comes to payments India has a few rules in place.

India uses methods for international payments, including wire transfers and online payment systems.

For example India has something called the Liberalised Remittance Scheme, which allows Indian residents to send money outside the country for purposes, such as education or travel.

India also has laws and regulations in place to prevent money laundering and other financial crimes so international payments in India are closely monitored.

International payments in India are typically made in currencies, such as the US dollar or the euro.

The Reserve Bank of India which is the bank of India plays a big role in regulating international payments in India.

India is working to make international payments faster and more convenient with the help of technologies like digital wallets and mobile payment apps.

Overall international payments, in India are a part of the countrys economy and India is taking steps to make them more efficient and secure.

India is getting ready for changes that might happen in the money world. The country wants to be prepared for financial disruptions.

India has to think about how to deal with these disruptions.

The government of India and the people who work with money in India are trying to figure out ways to make the financial system in India stronger.

This is so that when something big happens to the money system India will be okay.

India is looking at what other countries do to get ready for disruptions.

The people in charge of money in India are talking to experts from around the world to learn more about how to prepare for financial problems.

India wants to make sure that the financial system in India can handle any changes that might come in the future.

The main goal of India is to be ready for anything that might happen to the money system.

India is working hard to make the financial system, in India strong and safe.

At BRICS the Reserve Bank of India acts as Indias strategist it does not just act as a regulator, for India. The Reserve Bank of India plays a role at BRICS.

4. What Does “RBI Nudging India” Mean?

When people read that the Reserve Bank of India is nudging India at the BRICS meeting it means that the Reserve Bank of India is pushing India to do something at the BRICS meeting. The Reserve Bank of India is trying to get India to take some action at the BRICS meeting. This is what people are talking about when they say the Reserve Bank of India is nudging India at the BRICS meeting.

The Reserve Bank of India is encouraging the government and the BRICS partners to:

Reduce excessive dependence on the US dollar

Increase trade settlement in local currencies

Build BRICS-level financial infrastructure

Strengthen alternative payment systems

Support digital currency cooperation

Protect India from financial sanctions risks

Increase rupee’s international acceptance

This is not an aggressive move against the US, but a defensive and strategic move for financial autonomy.

5. The Dollar-Dominated Global System

Today:

Most of the worlds trade, than 85 percent is done using the US dollar. The US dollar is the currency that people use when they are buying and selling things with other countries. This is because the US dollar is a strong and stable currency and it is easy for people to use. So when countries are trading with each other they usually use the US dollar.

Most oil and commodity trading is in dollars

Global reserves are mostly in dollars

The SWIFT system, which is used for payments and messages around the world is controlled by Western countries. This means that Western countries have a lot of power over the system. The SWIFT system is very important for payments and messages and Western countries are, in charge of it.

This gives the United States a lot of power:

The bank can freeze the reserves of a person. This means that the bank can stop the person from using their money that’s in the reserves. The reserves are, like an account where people keep their money safe. When the bank freezes the reserves the person cannot take out their money from the reserves. The bank does this to the reserves to protect the persons money or to follow the rules. The reserves are very important. The bank has to be careful when it freezes the reserves.

Block banking access

Restrict trade channels

Russia found out the way in 2022 when Russia had to deal with some big problems. Russia was not ready, for what happened to Russia.

The country had a lot of money set aside. A huge amount of it hundreds of billions of dollars of its reserves was frozen and could not be used. This was a problem, for the country and its money the hundreds of billions of dollars of its reserves that were frozen.

The bank was cut off from the system. This means the bank can no longer use SWIFT. The SWIFT system is really important for banks. Without the SWIFT system the bank has problems, with money transfers. The bank is cut off from SWIFT. That is a major issue.

The whole world was really shocked by this. It was a deal that affected the entire world. This had an impact, on the entire world.

6. RBI’s Strategic Thinking

The Reserve Bank of India is asking a basic question:

What if one day India faces pressure? This is something that we should think about. India is a country and it has a lot of people. If India faces pressure it will be very bad for the people of India. The people of India will have a time. They will not have money to buy the things they need. India will have to find a way to deal with the pressure. India has to make sure that it can take care of the people of India. India has to be strong. It has to be able to handle the financial pressure. What will happen to India if it cannot handle the pressure? This is a question. India has to think about this. It has to come up with a plan. India has to make sure that it is ready, for anything that might happen. India is a country and it will get through this. The people of India are strong. They will help India get through the financial pressure.

Are our systems independent enough?”

India is geopolitically non-aligned, but:

The financial systems we have today are still linked to the dollar. This means that the dollar has an influence, on the financial systems. The financial systems are connected to the dollar in ways.

Most forex reserves are in dollars

International payments really depend on the system. The SWIFT system is what makes international payments possible. When we talk about payments we are talking about the SWIFT system. International payments need the SWIFT system to work.

So RBI’s aim is risk diversification, not confrontation.

7. Why BRICS is the Right Platform

The countries that are part of BRICS offer a lot of things. BRICS is a group that includes Brazil and Russia and India and China and South Africa. What BRICS offers is very interesting.

* BRICS has a lot to offer in terms of trade between the countries that’re part of BRICS.

The main thing that BRICS offers is a way for these countries to work together and help each other. BRICS offers opportunities, for the countries that are part of BRICS.

Large trade volume among members

Political will to reduce Western dominance

Financial institutions like:

New Development Bank (NDB)

Contingent Reserve Arrangement (CRA)

The Reserve Bank of India sees the BRICS countries as a testing ground for the Reserve Bank of India to try out things. The Reserve Bank of India thinks that the BRICS countries are a place, for the Reserve Bank of India to see how things work.

Rupee trade settlement

New payment systems

Alternative financial models

8. India’s Unique Position

India’s position is different from China and Russia:

Country Motivation

Russia Survival under sanctions

China Global currency ambition

India Strategic autonomy & risk protection

India is not looking to get rid of the dollar away. India wants to take its time and think about what to do with the dollar. The dollar is still very important, to India.

India is looking for some options. India needs to have a choices to consider. The people of India want options that will help India.

RBI’s message:

The United States dollar should remain a currency but people should have other options too. We need to make sure the dollar stays important. It is not the only currency that people can use. The dollar is a part of international trade so it should stay dominant but we should also allow other currencies to be used. This way the dollar stays strong. People have a choice, about which currency they want to use and that includes the dollar.

9. The Rupee’s Global Role

The Reserve Bank of India is slowly pushing:

Rupee trade settlement mechanisms

Vostro accounts

Direct currency exchange arrangements

Goal:

We should make the Indian rupee more acceptable to countries. The Indian rupee is our currency. We need to make it stronger. This will help the Indian rupee to be used more in trade.

When the Indian rupee is more acceptable internationally it will be easier for us to buy and sell things with countries. The Indian rupee will be like the dollar or the euro, which are used over the world.

We need to make the Indian rupee more stable and strong so that other countries will want to use it. This will be good, for our country. It will help the Indian rupee to be more popular. The Indian rupee should be accepted everywhere like the dollar.

Reduce dollar conversion costs

Increase trade efficiency

This lines up well, with the goals of the BRICS countries. The BRICS objectives are what this is trying to do.

10. Part 1 Summary

The Reserve Bank of India is telling India to do something at the BRICS meeting. The Reserve Bank of India wants India to take some action at the BRICS meeting.

* The Reserve Bank of India is trying to get India to work with countries at the BRICS meeting

* The Reserve Bank of India is pushing India to make some changes, at the BRICS meeting

The Reserve Bank of India is helping India at the BRICS meeting to make decisions. The Reserve Bank of India is guiding India at the BRICS meeting.

Prepare for a multipolar financial world

Reduce dollar dependence

Build parallel systems

Strengthen the rupee

Protect national financial sovereignty

Collaborate with emerging powers

This is not economic rebellion.

It is economic insurance.

The Reserve Bank of India sees the BRICS group as an important platform. This is because the Reserve Bank of India wants to reduce its dependence on the United States dollar. The Reserve Bank of India thinks that depending much, on the United States dollar is not a good thing. Now we will look at how the Reserve Bank of India plans to make this happen. The Reserve Bank of India has three plans to do this:

Trade in local currencies

Creation of alternative payment systems

Cooperation on digital currencies and financial technology

These ideas are not something people talk about. India and other BRICS nations are actually trying them out now. They are really testing these ideas to see how they work.

1. Local Currency Trade Settlement: The Core Idea

Today, most international trade works like this:

India → pays in US dollars → via American banks → through SWIFT → to another country

So India does business with Russia or Brazil. You know what happens. Dollars are used as the money, in the middle. This creates:

Extra conversion costs

Dollar dependence

Exposure to sanctions

Payment delays

The Reserve Bank of India wants to change this situation by encouraging people to use the currency for settling payments, which means the Reserve Bank of India is trying to make it easier for people to use the Indian currency instead of other currencies when they make payments.

India is paying Russia in rupees. This means India is using its money, the rupee to pay Russia. India and Russia have some kind of deal where India pays Russia in rupees.

Russia is paying India in rubles. This means that when Russia does business with India they are using rubles to make these payments. So Russia pays India in rubles, for the things they buy from India.

India is paying China in rupees. This means that India is using its money, which is the rupee to pay China. So India pays China in rupees, which’s a pretty interesting thing to do. India has to pay China in rupees, for the things it buys from China.

Brazil is paying India in the currency, which is called the real. Brazil uses the real to make payments to India. The real is the money that Brazil is using to pay India.

This really helps because it means that people do not need to use many dollars when they are trading things. The dollars are not as necessary, for trade.

2. This is how India is doing it with Vostro Accounts. India is using Vostro Accounts to make things work. Vostro Accounts are really helping India.

In the year 2022 the Reserve Bank of India introduced a system of Special Rupee Vostro Accounts.

A Vostro account means that a bank is holding money for someone like a Vostro account is for another bank. So when we talk about a Vostro account we are talking about a type of account that one bank has with another bank. The Vostro account is basically an account that the first bank has in the bank. For example a Vostro account can be used when a bank in one country wants to do business with a bank in another country. In this case the Vostro account is used to hold the money of the bank in the second bank.

* The Vostro account is used for transactions

* It is also used for trade between banks

The Vostro account is very important for banks because it allows them to do business with each other easily. When we think about a Vostro account we should remember that it is a way for banks to work together and make international trade possible. A Vostro account is a Vostro account. It plays a big role, in the banking system.

A bank from another country opens an account with a bank and they do it in rupees. The account is in the bank and it is in rupees. The foreign bank uses the bank to have an account, in rupees.

For example:

A bank from Russia has opened an account that uses the rupee in the State Bank of India. The Russian bank is doing this in the State Bank of India. This means the Russian bank will have a rupee account, in the State Bank of India. The account is for the Russian bank to use the rupee in the State Bank of India.

Russian importers pay money to their bank using rubles. They do this when they buy things from countries and they need to pay for these things. Russian importers use rubles because it is the money that Russia uses. They give these rubles to their bank.

The rupees are put into the Vostro account. This means that the rupees are added to the Vostro account. When we talk about the Vostro account we are talking about the account that is used for this purpose. The rupees that are credited to the Vostro account are now a part of the Vostro account.

Indian exporters get their money directly in rupees. This is a thing for Indian exporters because they do not have to worry about other currencies. Indian exporters can just focus on selling their things and getting paid in rupees. The Indian exporters, like this system because it is simple for them to get paid in rupees.

No dollar involved.

The Reserve Bank of India now wants the BRICS nations to adopt frameworks on a multilateral level. This is what the Reserve Bank of India is thinking about the BRICS nations. The Reserve Bank of India thinks that the BRICS nations should have frameworks. The BRICS nations should work together on this. The Reserve Bank of India wants the BRICS nations to do this on a level.

3. Benefits of Local Currency Trade

For India:

Reduces pressure on forex reserves

Supports rupee internationalisation

Cuts transaction costs

Faster payments

Protects from sanctions risk

For BRICS:

Builds financial independence

Reduces dollar monopoly

Strengthens South–South trade

This is one of RBI’s strongest nudges at BRICS.

4. BRICS Payment System: An Alternative to SWIFT

SWIFT is not a bank.

This is a network that banks use to send messages to each other about payments. Banks use this network to communicate with each other when they need to make payments. The network helps banks to talk to each other and make sure that payments are made correctly. The network is used by banks for payments.

But SWIFT is:

Headquartered in Belgium

Influenced by Western powers

Used as a sanctions weapon

Russia got cut off from the system in 2022. This was a deal for Russia. It was, like a wake-up call for Russia to realize what was happening with the system and how it would affect Russia.

Now:

China has this thing called the China International Payment System or CIPS for short which’s a payment system that China uses. The China International Payment System or CIPS is really important, for China. China uses the China International Payment System or CIPS to do business with countries.

Russia has its financial system called the SPFS. The SPFS is like a network that helps Russia do financial things without using other countries systems. Russia uses the SPFS to make payments and do financial stuff. The SPFS is important for Russia because it helps them be more independent, with their money. Russia wants to use the SPFS to do business with countries that also do not use the other systems.

India has SFMS (Structured Financial Messaging System)

The Reserve Bank of India wants the BRICS countries to:

Connect these systems

Create interoperability

Build a BRICS-wide messaging alternative

This does not mean that we have to stop using SWIFT away but we should create a backup system for SWIFT. We need to have a plan, in place in case something happens to SWIFT so we can use this system for SWIFT.

Think of it like:

A financial emergency exit.

5. The reason why India supports a system that runs parallel is because India does not want to replace the existing system. India wants a system and not a replacement for the existing system. This is why India is in favor of having a system. India thinks that a parallel system is better, than a replacement system. India supports a system because India believes it is the best option.

India is being very careful. India does not want any kind of confrontation, with anyone. India wants to avoid a fight.

RBI’s approach:

I think it is an idea to use SWIFT when SWIFT works properly. This way we can get the results from using SWIFT. So we should try to use SWIFT whenever SWIFT is working correctly.

Use BRICS systems when needed

Maintain optionality

This gives India the power to negotiate and also provides India with security. India gets to have a say. India is protected.

6. Digital Currency Cooperation (CBDC)

India has come out with a currency of its own. This digital currency is, from India. The country of India is now using its own digital currency. Indias digital currency is here now.

Digital Rupee (e₹)

China has a lot of things what do you want to know about China? China is a country, with a lot of people and China has a very long history.

* China has cities

* China has buildings

China has many different kinds of food and China has a lot of mountains and rivers. China is an interesting place to learn about.

Digital Yuan

Russia and Brazil and some other countries are trying out Central Bank Digital Currencies. They are seeing how Central Bank Digital Currencies work. Russia and Brazil are testing Central Bank Digital Currencies to understand them.

The Reserve Bank of India wants:

Cross-border CBDC payment systems within BRICS

Faster settlements

No intermediary banks

No dollar conversion

For example:

India is paying Brazil directly by using a system that changes digital rupees into digital reals. This means that India does not have to use any money it can just change its digital rupees into Brazils digital reals. India pays Brazil this way because it is easy and fast. India uses rupee to digital real conversion to make these payments.

This could be revolutionary.

7. Why CBDCs Matter for BRICS

They:

Bypass traditional banking systems

Reduce transaction time

Lower costs

Increase transparency

Avoid Western financial chokepoints

The Reserve Bank of India thinks that working together on Central Bank Digital Currency is going to be the support for the finance system of the BRICS countries. The Reserve Bank of India believes that Central Bank Digital Currency collaboration will be very important for the BRICS countries. The future of finance, in the BRICS countries will depend on Central Bank Digital Currency collaboration.

8. New Development Bank (NDB): Financing Without the Dollar

The BRICS countries made the New Development Bank to be different from the World Bank. This New Development Bank is like another choice, for people. The BRICS countries wanted to make something new so they created the New Development Bank.

The Reserve Bank of India wants

More lending in local currencies

Less dollar-denominated loans

Infrastructure funding without currency risk

This protects developing nations from things that can hurt them. Developing nations need to be protected from these things. Developing nations are very vulnerable.

Exchange rate shocks

Dollar appreciation crises

9. Contingent Reserve Arrangement (CRA)

CRA is a BRICS emergency fund:

Like a mini-IMF

For balance of payments crises

The Reserve Bank of India supports strengthening the Credit Rating Agency so the BRICS nations do not have to rely on countries for this. The Reserve Bank of India wants the Credit Rating Agency to be strong. This way the BRICS nations like India and other countries that are part of the BRICS group will be able to do things on their own. The Reserve Bank of India thinks that a strong Credit Rating Agency will be very good, for the BRICS nations.

Depend on IMF

Accept Western conditions

This means that people have control over their own money, which is a big part of financial freedom. Having financial sovereignty is really important because it allows people to make their decisions, about their money and that is what this increases. Financial sovereignty gives people the power to do what they want with their money.

10. Trade + Payments + Digital Finance = Financial Independence

RBI’s BRICS vision is a complete ecosystem:

Area Goal

Trade Local currencies

Payments BRICS messaging system

Banking Rupee Vostro framework

Digital Finance CBDC integration

Lending Local currency loans

Reserves Less dollar dominance

This is a silent financial revolution.

11. Is India Moving Too Fast?

No. India is being careful:

India still has a lot of dollars stored away in its reserves. The country of India is being very careful with its dollar reserves. India is making sure it has dollar reserves, for the future.

India still does most of its trade in dollars. The country is using dollars for a lot of its business deals. India and dollars are closely linked when it comes to trade. Most of the time India uses dollars to buy and sell things to countries.

India still uses the system. The SWIFT system is something that India has not stopped using. India is still relying on the system for now.

But RBI wants alternatives ready before crisis arrives.