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India: RBI Has Allowed Banks From 18 Countries Including Mauritius To Trade In INR

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According to the Indian government, the Reserve Bank of India (RBI) has allowed banks from 18 different nations to establish Special Vostro Rupee Accounts (SVRAs) in order to settle payments in rupees. Bhagwat Kishanrao Karad, the Indian Union Minister of State for Finance, stated in the Rajya Sabha, upper house of the Indian parliament, that the RBI had granted 60 such permits.

Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, and the United Kingdom are among the 18 countries on this list.

By contacting the Authorized Dealer (AD) banks in India, banks could establish SVRAs and, after following the proper procedures, could receive RBI approval. When the RBI declared that “it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in INR [Indian rupees],” the SVA procedure got under way.

In addition, Karad noted that Russia has advocated “de-dollarization” and the use of the Indian rupee in commerce.

“Procedures for trade in INR have been delineated by RBI in the Circular (No 10 RBI/2022-2023/90 dated 11.07.2022 on ‘International Trade Settlement in Indian rupees’. RBI has also issued FAQs on its website. RBI has clarified matters related to the operationalization of SRVAs through the said FAQs, which are available to banks, importers and exporters etc,” Karad added.

The foreign company’s holdings are kept in the Indian bank using SVRAs in the shape of Indian rupees.

Amounts paid in rupees by an Indian importer to a foreign merchant are credited to this vostro account. Similar to this, funds will be taken out of this account when an Indian exporter needs to be paid for his products and services in rupees. The normal account of the exporter will then receive credit.

According to records, the RBI had authorized “domestic and foreign AD Banks in 60 cases for opening SRVAs of banks from 18 nations,” said Karad.

The announcement 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.

Trade in local currencies has been suggested as an alternative to the current wave of international sanctions imposed during times of conflict, which are impeding supply networks and international trade flows.

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