RBI allows investment of surplus rupee balances in special vostro accounts into G-Secs, T-Bills

Reserve Bank of India

The Reserve Bank of India on Tuesday allowed foreign traders’ surplus rupee funds in Special Rupee Vostro Accounts (SRVA) for international trade settlement in Indian Rupees to be invested in government securities and treasury bills.

The changes are effective immediately, and operational guidelines have been issued to AD Category-I banks by the RBI, the release said.

As per the International Trade Settlement in Indian Rupees circular, the rupee surplus balance held may be used for permissible capital and current account transactions in accordance with mutual agreements.

The balance in Special Vostro Accounts can be used for payments for projects and investments, as well as for export/import advance flow management, the circular said.

The bank of a partner country may approach an AD bank in India for opening a Special INR Vostro Account. The AD bank will seek approval from the Reserve Bank with details of the arrangement. The AD bank maintaining the Special Vostro Account must ensure that the correspondent bank is not from a country or jurisdiction listed in the updated FATF Public Statement on High-Risk & Non-Cooperative Jurisdictions on which the FATF has called for countermeasures, the circular added.