9 Russian banks open vostro accounts for rupee settlement

The Reserve Bank of India (RBI) granted permission for Russian banks to open up to nine special Vostro accounts with two Indian banks in order to ease the rupee settlement of foreign trade. This will make it possible for India’s trade with Russia to be settled in rupees.

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The Reserve Bank of India (RBI) has granted permission for Russian banks to open up to nine special Vostro accounts with two Indian banks in order to ease the rupee settlement of foreign trade. This will make it possible for India’s trade with Russia to be settled in rupees.

“Nine accounts have been opened. One in UCO Bank, one in Sberbank, one in VTB, and 6 with IndusInd Bank,” said, Commerce Secretary Sunil Barthwal.

The major two banks in Russia, Sberbank, and VTB Bank are the first international lenders to be given permission. This account was registered with the government-run UCo Bank by the Russian energy company Gazprom, which does not have any offices in India.

“We want to encourage rupee commerce because it is in the best interest of the country. In addition, we wouldn’t waste time hunting for dollars. We will pursue rupee trading to the extent that it is feasible,” Barthwal added.

To stem the rupee’s decline against the dollar, the RBI had announced a new system to settle international commerce in rupees in July. The commerce ministry subsequently announced guidelines that will allow exporters to receive the benefits specified under the foreign trade policy even if the export realisation is in the local currency and not the dollar.