Special Rupee Vostro Accounts: RBI
The Reserve Bank of India (RBI) has allowed non-residents holding Special Rupee Vostro Accounts (SRVAs) to invest surplus balances in government securities, while also removing prior approval for banks to open SRVAs, these steps aimed at boosting rupee trade and internationalising the Indian Rupee.
- Special Rupee Vostro Accounts (SRVAs) are accounts opened by foreign entities with Indian banks. They facilitate settlement of international trade transactions in Indian Rupees.
- SRVAs introduced in 2022, the mechanism allows exporters and importers to invoice and settle trade directly in rupees.
- RBI Measures to Promote Rupee through SRVAs: Non-resident entities with SRVAs can now invest their rupee surplus balances in Central government securities (G-secs) and Treasury Bills.
- Earlier authorised dealer (AD) banks required RBI’s prior approval before opening SRVAs for overseas correspondent banks. Now AD banks can open SRVAs independently without seeking RBI permission.
- This aims to quicken the operationalisation of rupee-based trade settlements.
- It Promotes internationalisation of the Indian Rupee. Reduces dependence on hard currencies like the US dollar in bilateral trade.
- It Encourages surplus rupee funds to be productively deployed in Indian government securities.
