RBI lets 30 countries open vostro accounts with Indian banks for rupee trade

Reserve Bank of India (RBI) has permitted correspondent banks from 30 countries to open Special Rupee Vostro Accounts (SRVAs) with banks in India to facilitate cross-border trade in local currencies. 

As of now, 123 foreign banks are operating 156 SRVAs with 26 banks in India, minister of state for commerce and industry Jitin Prasada told the Rajya Sabha on Friday. 

RBI has also entered into local currency settlement agreements with select countries such as the UAE, Indonesia and Maldives for direct local currency trading. 

Additionally, the government is negotiating Free Trade Agreements (FTAs) with Oman, Australia, the UK, and the EU.

He said, the government, in consultation with the RBI, is taking various steps to enhance the acceptability and availability of the rupee for cross-border transactions with other local currencies.

Exporters and importers in India can now invoice in Indian rupee or domestic currencies of the respective countries and settle accounts in local currencies, without having to depend on the foreign exchange market.

This, he said, would lead to the development of a bilateral foreign exchange market.

Responding to a separate question, the minister said the government is also engaged in free-trade negotiations with countries like Oman, Australia, the UK and the European Union.

On e-commerce exports, the minister said the government has identified key regulatory and logistical challenges like delays in order fulfilment

He said the government is looking for ways to reduce the time taken between receipt of order and execution of exports as also issues like rejection of product, reconciliation of payments as also high bank charges. Also, under present conditions, e-commerce has no export credit facility or insurance cover, he said, adding that these issues need urgent attention of the government and industry.