Eight countries open 50 special rupee vostro accounts in 6 months to trade in INR
Eight countries open 50 special rupee vostro accounts in 6 months to trade in INR
New Delhi: Eight countries have opened Special Rupee vostro Account (SRVA) to facilitate overseas trade in Indian rupee. In about six months, these accounts have touched half a century mark and more countries are showing interest in settling trade in the Indian currency.
This shows that India’s policy of facilitating trade in rupee has been gaining momentum. A report by PTI quoted sources saying that so far, 49 vostro accounts have been opened.
Which countries have opened SRVA with India?
The eight countries that have opened SRVA to facilitate trade in Indian rupee are:
1 – Russia
2 – Sri Lanka
3 – Mauritius
4 – Malaysia
5 – Singapore
6 – Myanmar
7 – Israel
8 – Germany
In July last year, India’s central bank, Reserve Bank of India (RBI), issued detailed guidelines on cross-border trade transactions in the Indian rupee.
India has been trying to promote the use of rupee for settlement in trade with other countries after sanctions were imposed by the West and European nations following the Russia-Ukraine war.
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Special vostro account holders are allowed to invest surplus balance in Indian government securities. The facility has been provided by the RBI to help popularise the new arrangement.
The RBI had said, “Indian importers undertaking imports through this mechanism shall make payment in INR (Indian Rupee), which shall be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller/supplier.”
What is Special Rupee vostro account?
Special Rupee vostro account, or SRVA, is a new trade mechanism announced by the RBI to settle international trade in rupees.
To settle trade deals, authorised banks need to open and maintain SRVA of the partner trading country’s banks.
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Rupee vostro accounts keep the holding of the foreign entity in Indian bank, in Indian rupee. When an Indian importer make a payment to a foreign trader in rupees, the amount gets credited to this vostro account.
In the same way, when an Indian exporter has to be paid for goods and services in rupees, amount from this Vostro account will be deducted and same would be credited to the exporter’s regular account.
How is Special Rupee Vostro Account different from Rupee Vostro Account?
The settlement of International trade through INR is an additional arrangement to the existing system of settlement. SRVA requires prior approval before opening unlike Rupee Vostro account.
The settlement through INR is an additional arrangement to the existing system that uses freely convertible currencies and will work as a complimentary system. It helps minimise reduce dependence on hard (freely convertible) currency.
For opening SRVA, prior approval of RBI would be required.
With inputs from agencies
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