Banks from 18 countries have been permitted by the Reserve Bank of India (RBI) to open Special Vostro Rupee Accounts (SVRAs) for settling payments in Indian rupees, the government told the Rajya Sabha on Tuesday.
In response to a question from BJP’s Sushil Kumar Modi, Union Minister of State for Finance Bhagwat Kishanrao Karad said SVRAs could be set up by banks of partner countries by approaching Authorised Dealer (AD) banks in India that may get permission from the RBI after the due procedure.
Mr. Karad informed that as per records, the RBI had granted approval to “domestic and foreign AD Banks in 60 cases for opening SRVAs of banks from 18 nations — Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda and the United Kingdom.”
Out of the 18 countries mentioned in Mr. Karad’s response, Russia has been vocal in using trade in local currency for the overall process of “de-dollarisation”. But India has been supporting the idea of trade in local currency mainly to boost exports. The process of SVRAs began in July 2022 when the RBI announced 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 announcement came in the backdrop of the commodities crisis that was triggered by the Western sanctions against Russia after President Vladimir Putin launched the so called “special military operation” against Ukraine on February 24, 2022.
Trade in local currencies have been mooted as a solution to avoid the current wave of wartime international sanctions that are hampering supply chains and global trade flows.
In the last one year, India has finalised trade pacts with partner countries such as the UAE and Australia and begun negotiation with others such as the U.K. and the European Union while making inroads for the national currency in bilateral and global trade.
“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 Frequently FAQs on its website. RBI has clarified matters related to operationalisation of SRVAs through the said FAQs, which are available to banks, importers and exporters etc,” Mr. Karad stated in the Rajya Sabha.
