Reserve Bank of India
MUMBAI:
The Reserve Bank of India (RBI) on Friday permitted banks to open additional current accounts for export proceeds in addition to special rupee vostro accounts with a view to providing greater operational flexibility to exporters.
To provide greater operational flexibility to exporters, banks maintaining special rupee vostro accounts as per the provisions of the RBI circular dated July 11, 2022 are permitted to open an additional special current account for their exporter constituents exclusively for the settlement of their export transactions, the RBI said in a notification.
In July 2022, the RBI asked banks to put in place additional arrangements for export and import transactions in Indian rupees in view of the increasing interest of the global trading community in the domestic currency.
“In order to promote the growth of global trade with an emphasis on exports from India and to support the increasing interest of the global trading community in INR, it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports and imports in INR,” it said.
India has been trying to promote rupee trade following the Russia-Ukraine war and the sanctions imposed by the West.
In July 2022, the Reserve Bank of India (RBI) decided to allow the settlement of India’s international trade in rupees. Accordingly, authorised Indian banks must open and maintain special rupee vostro accounts of the partner trading country’s banks.
These accounts keep the foreign bank’s holdings in the Indian counterpart in rupees. When an Indian trader wants to make a payment to a foreign trader in rupees, the amount will be credited to this Vostro account.
Similarly, in the reverse scenario, the amount to be paid to an Indian trader is deducted from the Vostro account and credited to the person’s regular account.
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