RBI permits banks to open vostro accounts from 22 countries for trade in rupee

The RBI has taken a pivotal step by permitting 20 banks operating in India to open?92 Special Rupee Vostro Accounts (SRVAs) with partner banks from 22 countries. This allows exporters and importers from these nations to conduct trade transactions in domestic currencies, facilitating smoother and more efficient trade practices.

The list of countries eligible for the?Special Rupee Vostro Accounts includes?Bangladesh, Belarus, Botswana, Fiji, Germany, Guyana, Israel, Kazakhstan, Kenya, Malaysia, Maldives, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, and the United Kingdom. This move is expected to foster stronger economic ties between?India and these nations.

In a significant development, the?RBI and the Central Bank of UAE have signed a Memorandum of Understanding (MoU) on July 15, 2023, enabling exporters and importers to invoice and pay in their respective domestic currencies. This arrangement is expected to facilitate the development of a bilateral foreign exchange market and strengthen trade relations between India and the UAE.

The RBI introduced a framework in February of the current year to allow invoicing and payments for international trade in?Indian Rupee. This move encourages global trade growth, with a specific emphasis on boosting Indian exports and catering to the growing interest in INR as a currency for international transactions. The framework applies to any partner country engaging in trade with India in INR.

The Directorate General of Foreign Trade (DGFT) incorporated provisions in the Foreign Trade Policy?to facilitate international trade settlements in INR, covering invoicing, payment, and export/import settlements. Export benefits and fulfillment of Export Obligation are now granted for export realizations in INR, in accordance with RBI guidelines.