The Reserve Bank of India (RBI) has approved the opening of Special Vostro Rupee Accounts (SVRAs) so that banks from 18 other nations can settle payments in Indian rupees, the government informed the Rajya Sabha.
In-depth details about RBI has permitted Banks from 18 Nations to conduct trade in Indian Rupee
Bhagwat Kishanrao Karad, the Union Minister of State for Finance, said in answer to a query from Sushil Kumar Modi of the BJP that SVRAs might be established by partner banks by approaching Authorised Dealer (AD) banks in India who may obtain authorization from the RBI after the proper procedure.
According to records, the RBI had authorised “domestic & foreign AD Banks in 60 cases for opening SRVAs of banks from 18 nations like Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, & United Kingdom,” according to Mr. Karad.
Russia has been vociferous about employing trade in local currency for the broader process of “de-dollarization” out of the 18 nations named in Mr. Karad’s reply. Nonetheless, India has been advocating for local currency transactions primarily to increase exports. When the RBI declared in July 2022 that “it has been determined to put in place an additional mechanism for invoicing, payment, & settlement of exports/imports in Indian rupees,” the SVRA procedure got under way.
The declaration was made against the backdrop of the commodities crisis brought on by Western sanctions against Russia following the so-called “special military operation” against Ukraine that President Vladimir Putin initiated on February 24, 2022.
Trading in local currencies has been suggested as an alternative to the current wave of international sanctions imposed during times of war, which are impeding supply chains and international trade flows.
India has made progress for the national currency in both bilateral and international trade over the past year by finalising trade agreements with partners like the UAE and Australia and starting negotiations with others like the U.K. and the European Union.
The RBI outlined the procedures for trading in INR in its circular No. 10 RBI/2022-2023/90, dated July 11, 2022, titled “International Trade Settlement in Indian Rupees. On its website, RBI has also posted frequently asked questions. With the aforementioned FAQs, which are available to banks, importers, exporters, etc., the RBI has clarified issues relating to the operationalization of SRVAs, according to Mr. Karad in the Rajya Sabha.