According to documents, the Reserve Bank of India (RBI) has authorized domestic and foreign Authorized Dealer (AD) banks to open 60 Special Vostro Rupee Accounts (SVRAs) for banks from 18 different countries. These countries include Fiji, Guyana, Israel, Kenya, New Zealand, Malaysia, Mauritius, Oman, Russia, Seychelles, Botswana, Singapore, Sri Lanka, Tanzania, Germany, Uganda, Myanmar, United Kingdom.
While India supports the idea of trading in local currency to boost exports, Russia is a strong proponent of using trade in local currency for the dollarization process. The process of SVRAs started in July 2022 when the RBI announced that it had decided to introduce an additional arrangement for invoicing, payment and settlement of exports/imports in Indian Rupees.
The announcement comes in the wake of a cargo crisis created by Western sanctions against Russia after President Vladimir Putin launched a special military operation against Ukraine on February 24, 2022. Trading in local currencies is being mooted as a solution to avoid the current wave of wartime international sanctions that are disrupting supply chains and global trade.
According to Karad, the procedures for doing business in Indian Rupee are defined in RBI Circular (No 10 RBI/2022-2023/90 dated 11.07.2022 ‘International Trade Settlement in Indian Rupee’). RBI has also provided answers on its website clarifying matters related to the functioning of SRVAs through FAQs available to banks, importers and exporters.
Also Read : New regulations to ensure quality of imported products
SRVAs are bank accounts that allow foreign banks to make payments in Indian Rupees. These accounts are important as they help India increase its exports and avoid wartime international sanctions that hamper global trade activity. Sources said last December that the government has asked trading firms and banks to explore such opportunities with more countries, as part of facilitating rupee trade with Russia, Mauritius and Sri Lanka. Indian banks have already opened Special Vostro Rupee Accounts (SVRAs) with banks in these three countries. To help popularize the new arrangement, the RBI has allowed special Vostro accounts to deposit surplus in Government of India securities.
Read Latest Business News and Malayalam News
