RBI allows 30 countries to open 156 vostro accounts with Indian banks for cross-border rupee trade

The Reserve Bank has, to date, permitted 123 correspondent banks from 30 trading partner countries to open 156 Special Rupee Vostro Accounts (SRVAs) with 26 banks in India to promote bilateral trade in local currencies, the government said on Friday.

The Reserve Bank of India (RBI) has also entered local currency settlement system arrangements with select trade partner countries, including the UAE, Indonesia and Maldives.

In a written reply to the Rajya Sabha, Minister of State For Commerce and Industry Jitin Prasada said the move serves the purpose of encouraging cross-border trade settlements in rupee and the local bank of the partner country,

"As on date, RBI has permitted 123 Correspondent banks from 30 trading partner countries for opening of total 156 SRVAs with 26 AD (authorised deal) banks in India," he said.

The government in consultation with the RBI, has taken several steps towards increasing the availability and acceptability of the domestic currency and use of other local currencies for cross-border transactions.

This would enable exporters and importers to invoice and pay in their respective domestic currencies enabling the development of a bilateral foreign exchange market.

Ongoing FTA negotiations

Replying to a separate question, the minister said the negotiations for free trade agreements (FTAs) with Oman, Australia, the UK, and the European Union are currently ongoing.

He said the government is taking necessary measures to ensure that stakeholder consultations, including industry representation, are conducted at all stages of the negotiations.

Replying to another question on e-commerce exports, the minister said key regulatory and logistical challenges in these shipments have been identified, including delays in time taken from receiving the order to the fulfilment overseas, challenges in re-importing e-commerce returns and rejects, high banking fees for export payments reconciliation, and the lack of financial products such as export credit and insurance for cross-border e-commerce exporters.

"Possible measures have been identified for consideration by industry and government stakeholders," Prasada said.