In a Move To Strengthen Domestic Currency, India To Initiate Rupee Trade Beyond RussiaIndia is in talks with Sri Lanka, the Maldives and multiple south east Asian, African and Latin American countries to initiate trading in the Indian rupee, reported The Indian Express
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On the lines of an arrangement being worked out with Russia, India is in talks with Sri Lanka, the Maldives and multiple south east Asian, African and Latin American countries to initiate trading in the Indian rupee.
The countries in these geographies have shown interest in opening Special Rupee Vostro or SRV accounts, The Indian Express reported.
"The ministry of external affairs mentioned their missions abroad in this regard. Interest was also forthcoming from several countries, notably Sri Lanka, Maldives, various Southeast Asian, African and Latin American countries," read the minutes of the meeting in September chaired by the then Department of Financial Services secretary Sanjay Malhotra, the report added.
A Vostro account is an account held by a bank that allows the customers to deposit money on behalf of another bank. The first country to open a special Rupee Vostro account is Russia.
Earlier in July, The Reserve Bank of India had announced guidelines on overseas trade. In part, this is also aimed at curtailing India's dollar dependence for trade, and indirectly strengthening the domestic currency. "The Department of Economic Affairs also mentioned that based on their interaction in various bilateral meetings/dialogues with partner countries, there was considerable interest from various countries in opening SRV accounts," the report added.
Under the Indian rupee arrangement, banks in India will open Vostro accounts (an account that an Indian bank will hold on behalf of another bank) of correspondent bank/s of the partner country for trading. Indian importers can pay for their imports in rupee into these accounts. These earnings (from Indian imports) can then be used to pay Indian exporters in Indian Rupee. Unlike regular Vostro accounts, INR (Indian Rupee) balances can be held in these Special Vostro Accounts rather than them being only transit accounts like normal Vostro accounts, explained the report.
