RBI approves 12 vostro a/cs for rupee trade

The Reserve Bank of India (RBI) has permitted banks to open 12 special “vostro accounts”, to facilitate import-export trade in the rupee, the apex bank’s executive director Deepak Kumar said.

The RBI had earlier allowed two Indian lenders — UCO and IndusInd Bank — to open nine special vostro accounts for facilitating overseas trade in rupee.

“We are not saying that dollar prominence should come down, but rupee prominence should go up. We are aiming for rupee acceptance. The rupee related and currency-paired rupee market should develop liquidity and depth,” he added.

Vostro accounts are held by a bank on behalf of another (often foreign) bank. Such an arrangement forms a key part of correspondent banking. So far, not a single overseas trade transaction directly involving the rupee has taken place.

In July, the RBI had unveiled a mechanism to settle international transactions in rupees, in order to promote global trade with emphasis on exports from India, and to push the Indian unit as an international currency. The mechanism is also expected to enable trade with sanction-hit nations such as Russia.