The Reserve Bank of India (RBI) has allowed banks in 18 countries to open Special Vostro Rupee Account (SVRA) for settlement of payments in Indian rupees, according to a statement made by the government in the Rajya Sabha on Tuesday. Union Minister of State for Finance Bhagwat Kishanrao Karad said SVRA can be set up by banks of partner countries by approaching Authorized Dealer (AD) banks in India who can obtain permission from RBI after due process.
According to records, the Reserve Bank of India (RBI) has authorized Authorized Dealer (AD) banks, both domestic and foreign, to open 60 Special Vostro Rupee Accounts (SVRA) for banks in 18 different countries. These countries include Fiji, Guyana, Israel, Kenya, New Zealand, Malaysia, Mauritius, Oman, Russia, Seychelles, Botswana, Singapore, Sri Lanka, Tanzania, Germany, Uganda, Myanmar and the United Kingdom.
Read also: Indian startups move $250-300 million from Silicon Valley Bank as US allows withdrawals
Russia has been a vocal supporter of trading in the local currency for the process of “de-dollarization”, while India has been supportive of the idea of trading in the local currency to promote exports. The SVRA process began in July 2022 when the RBI announced that it has decided to set up an additional system for invoicing, payment and settlement of exports/imports in Indian Rupees.
The announcement came in the backdrop of a commodity crisis triggered by Western sanctions against Russia after President Vladimir Putin announced the launch of a “special military operation” against Ukraine on February 24, 2022. Trading in local currencies has been presented as a solution to survive the current wave. Wartime international sanctions that are disrupting supply chains and global trade flows.
Read also: Signature Bank closes amid banking turmoil in US after Silicon Valley bank
According to Karad, the procedures for trading in INR have been delineated by the RBI vide circular (No. 10 RBI/2022-2023/90 dated 11.07.2022 on ‘Settling International Trade in Indian Rupee’). RBI has also released Frequently Asked Questions (FAQs) on its website, clarifying matters relating to the operation of SRVA through the said FAQs, which are available to banks, importers and exporters.
frequently Asked question:
Q1: What are Special Vostro Rupee Accounts (SVRA) and why are they important?
SVRAs are bank accounts that allow foreign banks to settle payments in Indian Rupees. This is significant as it will help boost India’s exports and avoid wartime international sanctions that impede global trade flows.
Q2: Which countries are allowed to open SVRA with Indian banks?
As per records, the RBI has approved banks from 18 countries including Fiji, Guyana, Israel, Kenya, New Zealand, Malaysia, Mauritius, Oman, Russia, Seychelles, Botswana, Singapore, Sri Lanka, Tanzania, Germany, Uganda, Myanmar, and the United Kingdom.