HUGE! India's RBI nods for trading in national currencies for 18 countries

Banks from 18 countries have been permitted by the Reserve Bank of India (RBI) to open Special Vostro Rupee Accounts (SVRAs) for settling payments in Indian rupees, the government told the Rajya Sabha on March 14.

In response to a question from BJP’s Sushil Kumar Modi, Union Minister of State for Finance Bhagwat Kishanrao Karad said SVRAs could be set up by banks of partner countries by approaching Authorised Dealer (AD) banks in India that may get permission from the RBI after the due procedure.

According to records, the Reserve Bank of India (RBI) has authorized both domestic and foreign authorized dealer (AD) banks to open 60 Special Vostro Rupee Accounts (SVRAs) for banks from 18 different nations. These 18 nations include Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda and the United Kingdom.

Russia has been a vocal proponent of using trade in local currency for the process of “de-dollarisation”, while India has been supporting the idea of trade in local currency to boost exports. The process of SVRAs began in July 2022 when the RBI announced that it has decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in Indian rupees.

This announcement came in the backdrop of the commodities crisis triggered by Western sanctions against Russia after President Vladimir Putin launched the “special military operation” against Ukraine on February 24, 2022. Trade in local currencies has been mooted as a solution to avoid the current wave of wartime international sanctions that are hampering supply chains and global trade flows.

What are Special Vostro Rupee Accounts (SVRAs)?

SVRAs are bank accounts that allow foreign banks to settle payments in Indian rupees. This is important as it will help boost India's exports and avoid wartime international sanctions that hamper global trade flows.