RBI permits banks to open additional special current account for exports proceeds
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The Reserve Bank of India (RBI) has permitted banks to open additional special current account for exports proceeds in addition to special rupee vostro accounts with a view to provide greater operational flexibility to exporters.
In July 2022, in order to promote growth of global trade with emphasis on exports from India and to support the increasing interest of global trading community in INR, the RBI has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in INR. India has been trying to promote rupee trade following the Russia-Ukraine war and the sanctions imposed by the West. It also decided to allow the settlement of India's international trade in rupee.
Accordingly, authorised Indian banks must open and maintain special rupee vostro accounts of the partner trading country's banks. These accounts keep the foreign bank's holdings in the Indian counterpart in rupees. When an Indian trader wants to make a payment to a foreign trader in rupees, the amount will be credited to this vostro account. Similarly, in the reverse scenario, the amount to be paid to an Indian trader is deducted from the vostro account, and credited to the person's regular account.
