The Reserve Bank of India (RBI) has allowed banks from 18 countries to open Special Vostro Rupee Accounts (SVRAs) for settling payments in Indian rupees, according to a statement by the government to the Rajya Sabha on Tuesday. Union Minister of State for Finance Bhagwat Kishanrao Karad stated that the SVRAs could be set up by banks of partner countries by approaching Authorised Dealer (AD) banks in India that may get permission from the RBI after due procedure.
According to records, the Reserve Bank of India (RBI) has authorized both domestic and foreign authorized dealer (AD) banks to open 60 Special Vostro Rupee Accounts (SVRAs) for banks from 18 different nations. These countries include Fiji, Guyana, Israel, Kenya, New Zealand, Malaysia, Mauritius, Oman, Russia, Seychelles, Botswana, Singapore, Sri Lanka, Tanzania, Germany, Uganda, Myanmar, and the United Kingdom.
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Russia has been a vocal proponent of using trade in local currency for the process of “de-dollarisation”, while India has been supporting the idea of trade in local currency to boost exports. The process of SVRAs began in July 2022 when the RBI announced that it has decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in Indian rupees.
This announcement came in the backdrop of the commodities crisis triggered by Western sanctions against Russia after President Vladimir Putin launched the “special military operation” against Ukraine on February 24, 2022. Trade in local currencies has been mooted as a solution to avoid the current wave of wartime international sanctions that are hampering supply chains and global trade flows.
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According to Karad, procedures for trade in INR have been delineated by the RBI in Circular (No 10 RBI/2022-2023/90 dated 11.07.2022 on ‘International Trade Settlement in Indian rupees’). RBI has also issued frequently asked questions (FAQs) on its website, clarifying matters related to operationalisation of SRVAs through said FAQs, which are available to banks, importers, and exporters.
Q1: What are Special Vostro Rupee Accounts (SVRAs) and why are they important?
SVRAs are bank accounts that allow foreign banks to settle payments in Indian rupees. This is important as it will help boost India's exports and avoid wartime international sanctions that hamper global trade flows.
Q2: Which countries are allowed to open SVRAs with Indian banks?
As per records, the RBI has granted approval to banks from 18 nations, including Fiji, Guyana, Israel, Kenya, New Zealand, Malaysia, Mauritius, Oman, Russia, Seychelles, Botswana, Singapore, Sri Lanka, Tanzania, Germany, Uganda, Myanmar, and the United Kingdom.