RBI EASES RULES FOR SPECIAL RUPEE VOSTRO ACCOUNTS

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The Reserve Bank of India (RBI) has issued a new directive to all Category‑I Authorised Dealer (AD) banks, simplifying the process of international trade settlements in Indian Rupees (INR).

As per the latest circular, AD Category‑I banks can now open Special Rupee Vostro Accounts (SRVAs) for overseas correspondent banks without prior RBI approval. This move will boost Indian Rupee trade settlements and facilitate smoother international trade.

what is a special rupee vostro account (srva)?

A Vostro Account is an account maintained by a foreign bank with an Indian bank in INR.

A Special Rupee Vostro Account (SRVA) is specifically used to settle international trade in Indian Rupees:

• When Indian exporters receive payments in INR, the foreign bank’s SRVA in India is credited.
• Import payments in INR are debited from the same account.

SRVAs are part of RBI’s initiative launched in July 2022 to promote the rupee in global trade and reduce reliance on the US dollar.

who can open srvAs?

• AD Category‑I banks in India can open SRVAs.
• Overseas correspondent banks can maintain these accounts with Indian banks.
• Earlier, RBI approval was mandatory, but now banks can open SRVAs directly.

latest update (august 2025)

• Banks can open SRVAs without prior RBI approval.
• The change is effective immediately.
• The aim is to streamline INR trade settlements and avoid delays.

impact on international trade

• Encourages more countries to settle trade in INR, reducing foreign currency dependency.
• Facilitates smoother export and import transactions for Indian businesses.
• Supports India’s goal of internationalizing the rupee and strengthening forex management.

rbi’s legal basis

The directions are issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999. AD banks must inform their clients and trade partners about these updated provisions immediately.

In summary, the RBI’s August 2025 decision empowers banks to open SRVAs freely, making Indian Rupee trade settlements faster and promoting the rupee as a global trade currency.