The Reserve Bank of India (RBI) has made a significant change to streamline the process for opening Special Rupee Vostro Accounts (SRVAs). On Tuesday, the central bank announced that banks no longer need prior approval to open these accounts for correspondent banks. This move is set to speed up cross-border trade transactions in Indian rupees.
Back in July 2022, the RBI introduced a framework for invoicing, payments, and settlements of exports and imports in rupees. Under this system, banks were allowed to open SRVAs but had to seek RBI approval first. The latest update removes this requirement, giving banks more flexibility.
“Based on a review of the procedure involved in opening the SRVA, it has been decided to do away with the need for seeking RBI approval,” the central bank stated. This change is expected to significantly reduce processing time, making it easier for businesses to engage in international trade using rupees.
SRVAs play a crucial role in facilitating trade settlements without reliance on foreign currencies like the US dollar. By eliminating the approval step, the RBI aims to promote the use of the rupee in global transactions. This could also reduce exchange rate risks for Indian businesses.
Banks can now independently open SRVAs for their correspondent partners, cutting down delays. The RBI believes this procedural tweak will enhance efficiency and support the growing adoption of rupee-based trade.
Trade partners dealing with India may find it more convenient to settle payments directly in rupees, bypassing traditional currency conversions. This aligns with the RBI’s broader goal of internationalizing the Indian rupee.
The move comes as part of ongoing efforts to simplify regulatory processes and bolster India’s position in global trade. Businesses and financial institutions will likely welcome the reduced bureaucracy, enabling smoother transactions.
With this update, the RBI continues to refine its policies to support economic growth and ease of doing business. The focus remains on making the rupee a more attractive option for international trade settlements.