The Reserve Bank of India (RBI) has streamlined the process for banks to facilitate cross-border trade transactions in Indian Rupees by removing the requirement of prior RBI approval for opening Special Rupee Vostro Accounts (SRVAs).
In a press release issued today, the RBI stated that Authorized Dealer (AD) banks are now permitted to open SRVAs of correspondent banks on their own initiative without having to seek prior approval from the Reserve Bank.
This adjustment aims to accelerate the opening of these accounts, which are instrumental for invoicing, payment, and settlement of exports and imports settled in INR. The new rule comes into force with immediate effect, RBI said in its release.
The Special Rupee Vostro Account (SRVA) framework, introduced by the Reserve Bank of India (RBI), enables seamless cross-border trade by facilitating transactions in Indian Rupees (INR). This mechanism allows foreign banks to hold Rupee-denominated accounts with Indian banks to settle cross border trade transactions, reducing reliance on third-party currencies and enhancing financial stability. It supports both importers, who make payments in INR, and exporters, who receive proceeds from the Vostro account, ensuring efficient settlements.
By easing procedural hurdles, the Reserve Bank expects to expedite trade financing services, support exporters and importers, and strengthen bilateral trade relations by offering banks greater operational flexibility.
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The development comes at a time when the Indian economy faces challenges from global trade uncertainties, including the tariff threats on Indian goods by USA.
Simplifying the SRVA account opening process is seen as a step to counteract such headwinds by facilitating smoother and cost-effective cross-border settlements.
(Edited by : Sheersh Kapoor)
