The numbers clearly indicate a significant progress in the development of mechanism to settle international trade in Indian rupees.
Digital
Desk: With
more countries working to de-dollarize global trade, the Indian rupee is
getting closer to becoming an international currency. Several countries have
expressed interest in facilitating international trade in INR, and to
facilitate the process, India's central bank, the RBI, has approved the
establishment of 60 special rupee vostro accounts in 18 countries, including
Russia and Sri Lanka.
Bhagwat Karad, India's Minister of State for Finance, informed
parliament that the Reserve Bank of India (RBI) had granted approval to
"domestic and foreign AD (Authorised Dealer) banks in 60 cases for opening
SRVAs of banks from 18 nations" for settling payments in Indian rupees.
The minister further said, out of the 18 countries, Russia has
been vocal in facilitating trade in local currency for the overall process of
"de-dollarisation". He went on to say that India, on the other hand,
has been strongly supporting the idea of trading in local currency in order to
boost exports.
18 countries allowed to trade in Indian rupees
The 18
countries that have been allowed to trade in Indian rupees are:
1 – Russia
2 –
Singapore
3 – Sri
Lanka
4 – Botswana
5 – Fiji
6 –
Germany
7 – Guyana
8 – Israel
9 – Kenya
10 – Malaysia
11 – Mauritius
12 – Myanmar
13 – New
Zealand
14 – Oman
15 – Seychelles
16 – Tanzania
17 – Uganda
18 – United
Kingdom.
The numbers
clearly indicate a significant progress in the development of mechanism to
settle international trade in Indian rupees.
What is Special Rupee Vostro Account or SRVA?
The SRVA
process began last July, when the RBI issued detailed guidelines on
cross-border trade transactions in Indian rupees (INR).
"It has been decided to implement an additional arrangement
for invoicing, payment, and settlement of exports/imports in INR," India's
central bank announced.
To settle trade using the new mechanism, authorised banks in India
must open and maintain SRVAs of the banks of the partner trading country.
These accounts maintain the foreign entity's holdings in the
Indian bank in Indian rupees. When an Indian importer pays a foreign trader in
rupees, the funds are credited to this vostro account.
Similarly, when an Indian exporter is paid in rupees for goods and
services, the amount deducted from this vostro account is credited to the
exporter's regular account.
Holders of SRVAs may invest any surplus balance in Indian
government securities. The RBI is providing this service to help popularise the
new arrangement.
"Indian importers engaging in imports through this mechanism
shall make payment in INR (Indian Rupee), which shall be credited into the
special vostro account of the partner country's correspondent bank, against
invoices for the supply of goods or services from the overseas
seller/supplier," the Indian central bank stated.
After the West and European nations imposed sanctions following
Russian President Vladimir Putin's launch of a "special military
operation" against Ukraine on February 24, 2022, India has been attempting
to promote the use of INR for trade settlement with other countries.
Sberbank, VTB Bank, and Gazprombank were among the first Russian
banks to receive RBI approval for SRVAs.
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