RBI approves 60 ‘vostro’ accounts for rupee trade

The Reserve Bank of India (RBI) has so far granted approval for opening of 60 special rupee vostro accounts in domestic and foreign banks in 18 countries including Russia, Singapore and Sri Lanka to facilitate overseas trade in the Indian currency, Union Minister of State for Finance Bhagwat Karad informed parliament on Tuesday.

The other countries include Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Seychelles, Tanzania, Uganda and the UK.

This shows a significant progress in the development of a mechanism to settle international trade in rupee.

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Last year, the RBI came out with a mechanism to allow overseas trade in rupee to facilitate import of cheaper oil from Russia following sanctions imposed by the west.

Russia’s leading banks Sberbank, VTB Bank and Gazprombank were among the first to be granted approval by the RBI for special rupee vostro accounts.

As per a RBI circular released in July 2022, Indian importers undertaking imports through this mechanism shall make payment in INR 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.

Indian exporters, undertaking exports of goods and services through this mechanism, shall be paid the export proceeds in INR from the balances in the designated special vostro account of the correspondent bank of the partner country.