Iraq's Region Trade Bank has opened an Indian Rupee (INR)-trading account at New Delhi-based DBS Bank, the Indian Embassy in Baghdad said in a statement on Tuesday.
"It will accelerate commercial operations between the two friendly countries. This initiative will reduce transaction costs and eliminate currency exchange hurdles," the Indian mission stated.
A statement from the Region Trade Bank described the opening of the Vostro account as a "pioneering initiative".
"This transformation aims to eliminate the challenges related to currency exchange and reduce transaction costs and the time required to complete them, which will positively reflect on the efficiency of trade between Iraq and India," the Iraqi bank said.
The bank called upon Iraqi and Indian businesses to use the new facility to boost "efficiency" between the countries.
India and Iraq conducted a two-way trade of $21.40 billion in 2022, according to Ministry of External Affairs (MEA). Iraqi exports to India dominated the economic relationship, thanks to the crude supplies to the world's third-biggest oil consumer.
Iraq has consistently ranked among India's top three crude suppliers in recent years, with Iraqi exports peaking to a record-high of 1.30 million barrels per day (bpd) last month, according to reports citing ship tracking data.
The development comes amid ongoing policy measures in both Iraq and India to cut down dependency on US Dollar (USD) by enhancing the share of trade in national currencies.
The oil-rich Iraqi economy has in recent months began trading in other non-USD currencies such as Chinese Yuan, the Turkish Lira as well as the Emirati Dirham, according to reports citing Central Bank of Iraq (CBI) Governor Ali Al-Alaq.