The Reserve Bank of India (RBI) has enabled banks from 22 diverse nations to establish Special Vostro Rupee Accounts (SVRA), for facilitating payments in Indian rupees on the international stage. This list encompasses countries across several continents including Bangladesh, Belarus, Botswana, Fiji, Germany, Guyana, Israel, Kazakhstan, Kenya, Malaysia, Maldives, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, and the United Kingdom.
As of now, active Vostro accounts exist in Russia, Sri Lanka, and Mauritius, with plans underway for approximately 12 more countries to join this initiative. Indian banks are set to establish 92 SVRAs for their international counterparts among these countries, signaling a concerted effort to enable trade in local currencies.
Anil Kumar Bhansali, who leads treasury operations at Finrex Treasury Advisors, shared insights with Bizz Buzz on the economic implications of this move: “This would enable exporters and importers to invoice in their respective domestic currencies, enabling the development of a bilateral foreign exchange market.”
The integration of Vostro accounts is timely, considering recent geopolitical tensions and economic sanctions which have complicated dollar transactions with countries like Venezuela, Iran, and notably, Russia. The RBI’s move is intended to circumvent such economic barriers, boost the international stature of the rupee, and diminish the overheads linked with currency exchanges.
Supporting this initiative, provisions have been woven into the Foreign Trade Policy by the Director General of Foreign Trade, encompassing all facets of trade settlements from invoicing to payments. Additionally, export incentives and requirements are now achievable with revenue in rupees, consistent with RBI’s guidelines.
An anonymous industry authority commended the RBI’s forward-thinking approach yet offered a perspective on the broader economic context. Given that the dollar accounts for nearly half of global trade invoicing and dominates international forex transactions, the transition towards rupee utilization will unfold through careful, incremental steps.
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