Finance Ministry To Meet Bank Chiefs To Promote Cross-Border Trade In RupeeThe meeting will be chaired by financial services secretary Vivek Joshi and is also likely to see attendance from representatives of the Reserve Bank of India and Indian Banks' Association (IBA)

The finance ministry has called a meeting of chief executive officers (CEOs) of banks, including top six private sector lenders, on December 5 to discuss ways to promote cross-border trade in the rupee instead of the US dollar, according to a report by PTI.

The meeting will be attended by other stakeholders, including senior officials of external affairs and commerce ministries, and will review the progress made on this front so far. The meeting will be chaired by financial services secretary Vivek Joshi and is also likely to see attendance from representatives of the Reserve Bank of India and Indian Banks' Association (IBA), as reported by PTI quoting a source.

Following detailed guidelines from the Reserve Bank of India (RBI) on cross-border trade transactions in domestic currency in July, about nine special vostro accounts have been opened with two Indian banks to facilitate overseas trade in the rupee, stated the report.

A vostro account is an account a correspondent bank holds on behalf of another bank. These accounts are an essential aspect of correspondent banking in which the bank holding the funds acts as custodian for or manages the account of a foreign counterpart.

The report added that Sberbank and VTB Bank, the largest and second-largest banks of Russia, respectively, are the first foreign lenders to receive the approval after the RBI announced the guidelines. RBI as per the guidelines decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in INR.

Another Russian bank Gazprom, which does not have its bank in India, has also opened this account with Kolkata-based UCO Bank. The move to open the special vostro account clears the deck for settlement of payments in the rupee for trade between India and Russia, enabling cross-border trade in the Indian currency, which the RBI is determined to promote, according to the report.

As per available reports, the RBI had earlier said that "Indian importers undertaking imports through this mechanism shall make payment in INR, which shall be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller/supplier."