RBI has allowed banks from 18 countries to trade in rupee
By siliconindia | Wednesday, March 15, 2023
Banks from 18 countries have been authorised by the Reserve Bank of India (RBI) to open Special Vostro Rupee Accounts (SVRAs) for settling payments in Indian rupees, the government told the Rajya Sabha. In response to a question from BJP’s Sushil Kumar Modi, Union Minister of State for Finance Bhagwat Kishanrao Karad said SVRAs could be set up by banks of partner countries by approaching Authorised Dealer (AD) banks in India that may get authorization from the RBI after the due procedure.
Mr.Karad informed that as per records, the RBI had granted approval to “domestic and international AD Banks in 60 cases for opening SRVAs of banks from 18 nations Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda and the United Kingdom.” Out of the 18 countries mentioned in Mr.Karad’s response, Russia has been vocal in using trade in local currency for the overall process of “de-dollarisation”. But India has been supporting the idea of trade in local currency primarily to boost exports. The process of SVRAs began in July 2022 when the RBI declared that, “it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in INR".
The announcement came in the backdrop of the commodities crisis that was provoked by the Western sanctions against Russia after President Vladimir Putin launched the so called “special military operation” against Ukraine. Trade in local currencies have been suggested as a solution to avoid the current wave of wartime international sanctions that are hindering supply chains and global trade flows.
In the last one year, India has finalised trade pacts with partner countries such as the UAE and Australia and begun negotiation with others such as the U.K. and the European Union while making headway for the national currency in bilateral and global trade. “Procedures for trade in INR have been defined by RBI in the Circular No 10 RBI/2022-2023/90 on ‘International Trade Settlement in Indian rupees’. RBI has also issued Frequently FAQs on its website. RBI has made clear 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.
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