The State Bank of India (SBI) is preparing to play a key role in deepening economic ties between India and Israel by facilitating trade settlement in Indian rupees. This move aligns with India’s broader strategy to internationalise the rupee and reduce reliance on the US dollar in cross-border trade.
SBI is currently the only Indian bank with an on-ground presence in Israel, placing it in a unique position as both countries look to expand trade and investment cooperation.
India’s banking regulator has allowed Indian banks to settle exports and imports in Indian rupees (INR) with select partner countries. Israel has now been identified as one such partner under this framework.
Under this mechanism, Indian and Israeli companies will be able to pay and receive trade proceeds directly in rupees for goods and services. This removes the need for dollar-based transactions, helping businesses cut currency conversion costs and reduce exposure to exchange rate volatility.
SBI’s Tel Aviv branch has already received the required approvals to facilitate these transactions and has begun engaging with Israeli businesses to familiarise them with the new settlement system.
SBI’s outreach efforts include meetings and webinars with the Israel–India Chamber of Commerce. Several large Israeli defence companies, which already have deep links with India’s procurement ecosystem, have also shown interest.
Defence, technology, agriculture, and infrastructure are expected to be key beneficiaries of rupee-based trade settlement, especially as India and Israel work towards expanding bilateral commerce.
Beyond trade finance, SBI is also focusing on remittance services. Over 40,000 Indian workers have recently joined Israel’s workforce, mainly in construction and agriculture.
To support this growing community, SBI is facilitating the opening of NRI accounts and exploring partnerships with fintech firms and local banks. The goal is to make remittances to India faster, cheaper, and more efficient.
The rupee trade push comes alongside renewed diplomatic and economic engagement between the two countries. Senior ministerial visits, the signing of a Bilateral Investment Treaty, and progress on a long-pending Free Trade Agreement (FTA) have added momentum to the partnership.
As FTA talks move forward, rupee-based trade settlement is expected to act as both a practical tool and a strategic signal of deeper economic integration.
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SBI’s move to facilitate rupee-denominated trade with Israel marks an important step in India’s currency internationalisation journey. By lowering transaction costs, simplifying payments, and supporting growing trade and remittance flows, the initiative could strengthen India–Israel economic ties and position SBI as a key bridge between the two economies in the years ahead.
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Published on: Jan 5, 2026, 3:08 PM IST
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