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Thursday, March 23, 2023

RBI allows banks from 18 countries to trade in rupees, what does it mean

The Reserve Bank of India (RBI) has given permission to banks from 18 countries to open Special Vostro Rupee Accounts (SVRA) and use Indian rupees to settle payments. Indian government informed the parliament of this earlier this week.

The 18 countries are: Fiji, Botswana, Guyana, Germany, Kenya, Israel, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda and the United Kingdom

In response to a question, Union Minister of State for Finance Bhagwat Karad said banks from these 18 countries will have to approach authorised dealer (AD) banks in India who would obtain permission from the RBI for opening of such an account after due procedure.

The decision has been taken in the backdrop of commodity crisis post the start of Ukraine war. Trade in local currencies has been suggested as a solution to wartime sanctions. 

“Procedures for trade in INR have been delineated by RBI in the Circular (No 10 RBI/2022-2023/90 dated 11.07.2022 on ‘International Trade Settlement in Indian rupees’. RBI has also issued FAQs on its website. RBI has clarified matters related to operationalisation of SRVAs through the said FAQs, which are available to banks, importers and exporters etc,” Mr Karad stated in the Rajya Sabha.

Rajya Sabha is the upper house of Parliament of India.

(With inputs from agencies)

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