Special Rupee Vostro Account:
The Indian government has simplified the payment mechanism for traders importing pulses from Myanmar by implementing the Rupee/Kyat direct payment system through the Special Rupee Vostro Account (SRVA) via Punjab National Bank.
- This move aims to streamline trade transactions and enhance efficiency.
- India heavily relies on imports of pulses, including tur and urad dals, from Myanmar to meet domestic demand.
- Special Rupee Vostro Account (SRVA) is an account that domestic banks hold for foreign banks in the former’s domestic currency, which, in this case, is the Indian Rupee (INR).
- It allows domestic banks to provide international banking services to their clients who have global banking needs without physically being present abroad.
- The Reserve Bank of India (RBI) introduced the SRVA mechanism to settle international transactions in rupees.
- The primary objectives were to promote the growth of global trade, emphasize Indian exports, and position the rupee as an international currency.
- SRVA facilitates smoother trade between India and other nations, including those facing sanctions (e.g., Russia).
- By using INR, both parties avoid currency fluctuations and associated risks.
- Eliminating the need for multiple currency conversions saves costs for businesses.
Key Components of SRVA:
- All exports and imports must be denominated and invoiced in Indian National Rupee (INR).
- The exchange rate between the currencies of the trading partner countries is market-determined.
- The ultimate settlement also takes place in INR.
