Mumbai (Maharashtra) [India], August 6 (ANI): In a significant move aimed at further facilitating trade in Indian Rupees, the Reserve Bank of India (RBI) has simplified the procedure for opening Special Rupee Vostro Accounts (SRVAs).
As per the revised guidelines issued on Tuesday by the Central Bank, Authorised Dealer (AD) banks will no longer be required to seek prior approval from the central bank for opening SRVAs of correspondent foreign banks.
The RBI said the latest step was taken following a review of the earlier process, which mandated prior approval from the central bank for the opening of SRVA.
“Based on a review of the procedure involved in opening of the SRVA, it has been decided to do away with the need for seeking RBI approval for opening of SRVA. AD banks can now open SRVAs of correspondent banks without referring to the Reserve Bank of India,” the RBI stated in an official release.
With the revised norms, AD banks have now been empowered to independently open SRVAs, which will significantly expedite the setting up of such accounts and operationalisation of rupee-based trade settlements.
“The above change in procedure will considerably quicken the process for opening of SRVAs,” said RBI
This is part of RBI’s broader push to internationalise the Indian Rupee and reduce dependence on hard currencies like the US dollar in bilateral trade settlements.
The SRVA mechanism was first introduced in July 2022 for invoicing and settlement of exports and imports in Indian Rupees through a July 11, 2022, notification which noted,”In order to promote growth of global trade with emphasis on exports from India and to support the increasing interest of global trading community in INR, it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports / imports in INR. Before putting in place this mechanism, AD banks shall require prior approval from the Foreign Exchange Department of Reserve Bank of India, Central Office at Mumbai.”
However, the central bank has reiterated that while the approval requirement has been done away with, banks must continue to adhere to all existing norms and due diligence procedures in line with the Foreign Exchange Management Act (FEMA) and KYC standards. (ANI)
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