In a move to bolster operational flexibility for exporters, the Reserve Bank of India (RBI) has authorized banks to open additional current accounts for export proceeds, complementing the existing special rupee vostro accounts. This decision aims to facilitate export transactions and support the growing global interest in utilizing the Indian rupee for trade settlements.
As per the RBI’s notification, banks maintaining special rupee vostro accounts in accordance with the July 11, 2022 circular are now permitted to establish an additional special current account exclusively for their exporter constituents. This dedicated account will cater specifically to the settlement of export transactions, enhancing the convenience and efficiency of trade processes.
This initiative aligns with India’s efforts to promote rupee trade, particularly following the Russia-Ukraine conflict and the subsequent Western sanctions. In July 2022, the RBI paved the way for rupee-denominated international trade settlements, allowing authorized Indian banks to open and maintain special rupee vostro accounts for partner trading countries’ banks.
These vostro accounts serve as a repository for foreign banks’ holdings in Indian rupees. When an Indian trader makes a payment to a foreign trader in rupees, the corresponding amount is credited to the vostro account. Conversely, in the reverse scenario, payments due to Indian traders are deducted from the vostro account and credited to their regular accounts.
By enabling additional current accounts for export proceeds, the RBI is taking a proactive step to streamline export operations and support India’s trade ambitions. This measure is expected to further encourage the adoption of rupee-based trade settlements, fostering greater financial autonomy and resilience for the Indian economy.