RBI: The Reserve Bank of India (RBI) has allowed banks to open 12 special “vostro accounts” to facilitate rupee import-export trade, according to Deepak Kumar, executive director of the apex bank.
Nine unique vostro accounts were previously opened by two Indian lenders, UCO and IndusInd Bank, with the help of the RBI in order to facilitate rupee commerce abroad.
“We are not saying that dollar prominence should come down, but rupee prominence should go up. We are aiming for rupee acceptance. The rupee related and currency-paired rupee market should develop liquidity and depth,” he added.
A bank manages Vostro accounts on behalf of another bank, sometimes a foreign bank.
A crucial component of correspondent banking is an arrangement like that. There hasn’t been a single international trade deal that uses the rupee directly yet.
In order to advance worldwide trade with a focus on Indian exports and to promote the Indian rupee as a global currency, the Reserve Bank of India (RBI) launched a system to settle foreign transactions in rupees in July. The system is anticipated to make trading with countries under sanctions, including Russia, possible.
The internationalisation of the rupee will, albeit to a limited extent, help stop dollar outflows and halt the depreciation of the rupee, according to Hemant Jain, Vice President, PHDCCI.
In expanding on the difficulties, kumar stated that standardised legislation and cutting-edge technology, including RTGS 24×7, can eliminate issues with capital control, documentation, balance of payment reporting, and settlement and compliance complexity, among other things.
“The RBI will hold a meeting with the Department of Financial Services and export promotion councils to promote the mechanism at the branch level, where businessmen actually do their dealings. The mechanism will also enhance India’s bargaining power in trade and spur investments”, he added.