Govt Urges Trade Bodies To Explore Opportunities With Other Nations, Enhance Rupee Trade
In order to facilitate the rupee trade, the government has instructed trade bodies and banks to explore further opportunities with countries such as Russia, Mauritius, and Sri Lanka.
As a result of the rupee trade agreement, Indian banks have opened special-style rupee accounts (SVRAs) with the banks of these three nations. Currently, People's Bank of Sri Lanka and SBI Mauritius have opened an SVRA with State Bank of India (SBI). In Chennai, the Bank of Ceylon has also opened an account with its Indian subsidiary.
India Bank, headquartered in Chennai, has opened special rupee accounts with three Sri Lankan banks, which include the Colombia-based NDB Bank and Seylan Bank. Even the Union Bank of India has opened a special rupee account with Rosbank Russia.
Following RBI's approval, 11 banks have opened 18 special rupee accounts, including two in Russia and one in Sri Lanka. A detailed set of guidelines was issued in July by the Reserve Bank of India regarding cross-border transactions in the domestic currency.
According to the sources, the finance ministry asked the stakeholders in a meeting about expanding bilateral trade through SVRAs and internationalising payment modes. India has been promoting rupee trade following the Russia-Ukraine war and Western sanctions.
After the RBI announced its guidelines in July, Sberbank and VTB Bank became the first foreign lenders to receive approval. As per the guidelines, the RBI decided to establish an additional arrangement for invoicing, paying, and settling imports and exports in rupees. A Kolkata based UCO Bank, opened an account with Gazprombank (Russia based).
With the special Vostro account opened, the RBI hopes to facilitate cross-border trade in Indian rupees through the settlement of payments in rupees between India and Russia. As a means of making the new arrangement more popular, the RBI has allowed surplus balances to be invested in Indian government securities.
According to the RBI, imports made by Indian imposters through this mechanism will be paid in INR to the correspondent bank of the partner country via a special Vostro account.
