Indo-Russia rupee trade gets a push as Russian banks open nine vostro accounts
- IBJ Bureau
- Nov 16, 2022
As many as nine special vostro accounts had been opened with two Indian banks after permission from the Reserve Bank of India (RBI) to facilitate overseas trade in rupee, a top government official said on Tuesday.
Sberbank and VTB Bank – the largest and second-largest banks of Russia respectively – are the first foreign lenders to receive the approval after the RBI had announced the guidelines on overseas trade in rupee in July.
Another Russian bank Gazprom – which does not have its bank in India – has also opened this account with Kolkata-based UCO Bank.
“Nine accounts have been opened – one in UCO Bank, one in Sber, one in VTB and six with IndusInd Bank. These six are different Russian banks,” Commerce Secretary Sunil Barthwal told reporters in New Delhi.
The move to open the special vostro account clears the deck for settlement of payments in rupee for trade between India and Russia, enabling cross-border trade in the Indian currency, which the RBI is keen to promote.
The RBI has allowed the special vostro accounts to invest the surplus balance in Indian government securities to help popularise the new arrangement.
UCO Bank already has a vostro account-based facility in Iran. Gazprombank, or GPB, is a privately-owned Russian lender and the third-largest bank in the country by assets.
Last month, the RBI and the Finance Ministry had asked the top management of banks and representatives of trade bodies to push export and import transactions in the rupee. They want banks in India to connect with their foreign counterparts for opening special rupee vostro accounts to facilitate cross-border trade in the Indian currency rather than the popular mode of the US dollar.