The Reserve Bank of India (RBI) has announced a move to provide greater operational flexibility to exporters by allowing banks to open current accounts for export proceeds, in addition to special rupee vostro accounts. The decision comes as part of RBI’s efforts to promote the growth of global trade with a focus on exports from India and support the increasing interest of the global trading community in the Indian Rupee (INR).
In July 2022, the RBI had already asked banks to establish additional arrangements for export and import transactions in INR, following the growing interest in the domestic currency. This move was aimed at facilitating trade amidst the Russia-Ukraine war and the subsequent sanctions imposed by the West.
Under the new provisions, banks maintaining special rupee vostro accounts are now permitted to open special current accounts exclusively for the settlement of export transactions. This added flexibility will streamline the payment and settlement processes for exporters, ensuring smoother operations.
Authorized Indian banks have been instructed to open and maintain special rupee vostro accounts for partner trading country’s banks. These accounts serve as repositories for the foreign bank’s holdings in the Indian counterpart in rupees. When an Indian trader needs to make a payment to a foreign trader in rupees, the amount will be credited to this Vostro account. Similarly, when an Indian trader is due to receive a payment, it will be deducted from the Vostro account and credited to their regular account.
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