Banks told to speed up rupee vostro accounts

The Centre has asked banks to speed up the process of opening special rupee vostro accounts (SRVA) of correspondent banks of partner trading countries to promote cross-border trade in rupees instead of the US dollar.

It has also asked the department of commerce to talk to exporters and importers to make payment via SRV accounts and negotiate on rupee trade with trade partners. The centre suggested allowing set-off of export receivables against import payables and issue of bank guarantee for trade transactions.

According to a detailed recommendation shared with related ministries, the move will remove the need for settlement through convertible currency, reduce transaction costs and eliminate foreign exchange risk for exporters and importers.


The finance ministry on Wednesday held a meeting with officials from Reserve Bank, the commerce and industry minister and the ministry of external affairs chaired by Sanjay Malhotra, secretary, Department of Financial Service.

Officials aware of the discussions said the move will decrease the pressure on rupee and significantly help partner countries with balance of payment issues.

Using this framework, Indian exporters undertaking exports of goods and services shall be paid the export proceeds in Indian Rupee from the balances in the designated Special Vostro account of the correspondent bank of the partner country.

The finance ministry also asked Indian embassies and consulates to spread awareness about the framework.

In July, RBI released a circular on cross-border trade transactions, making an additional arrangement for invoicing, payment and settlement of exports/imports in rupee. "Indian importers undertaking trade through this mechanism shall make payment in INR, which shall be credited into Special Vostro account of correspondent bank of the partner country against the invoices for the supply of goods or services from the overseas seller /supplier," the circular said.