- Russia's Sberbank and VTB Bank got approval from RBI to facilitate foreign trade in rupee
- Both the Russian banks opened special vostro accounts in each of their Delhi branches
- The RBI is keen to promote cross-border trade in rupee
Russian banks: After getting a nod from the Reserve Bank of India (RBI), at least two Russian banks have opened special vostro accounts in order to facilitate foreign trade in the rupee.
The largest and second-largest banks in Russia - Sberbank and VTB Bank, are the first foreign lenders to get approval after the RBI formulated the guidelines in July for offshore rupee transactions.
According to reports, the two Russian banks have opened unique vostro accounts in each of their Delhi branches.
Earlier in September, the RBI granted permission to state-owned UCO Bank to establish a unique vostro account with Russia's Gazprombank (GPB).
It should be noted here that the GPB is a privately-owned lender and the third-largest bank in terms of assets in the nation.
This month in October, the Kolkata-based lender created the account. It was one of the first banks to get regulatory approval when the RBI decided to encourage rupee settlement.
The opening of the special vostro account clears the way for rupee payments to be settled for commerce between India and Russia, facilitating cross-border trade in the Indian rupee, which the RBI is eager to promote.
"Indian importers undertaking imports through this mechanism shall make payment in INR, which shall be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller/supplier," RBI had said earlier in a statement.
In an attempt to spread awareness about the new arrangement, the RBI has permitted the special vostro accounts to invest the surplus balance in Indian government securities.
Earlier, the RBI and the finance ministry also directed the top executives of banks and members of trade groups to promote export and import transactions in the rupee.
They wanted special rupee vostro accounts to be opened by Indian banks in cooperation with their foreign counterparts in order to promote cross-border trade in rupees rather than the more common US dollar.
(With inputs from PTI)