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RBI allows banks to open 12 'vostro accounts' to facilitate rupee acceptance in international trade
Vostro accounts
Image Credit: UNI

RBI allows banks to open 12 'vostro accounts' to facilitate rupee acceptance in international trade

| @indiablooms | 26 Nov 2022, 11:34 am

New Delhi: In a move to facilitate import-export trade in the rupee, the Reserve Bank of India (RBI) permitted banks to open “vostro accounts”.

The apex bank had earlier allowed two banks—UCO Bank and IndusInd Bank—to open vostro accounts.

“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,” RBI executive director Deepak Kumar said on Friday.

RBI’s move to allow banks to open vostro accounts is aimed at establishing the rupee as an international currency and facilitating its acceptance in foreign trade.

The mechanism was unveiled in July to settle international transactions in rupees.

It is also likely to enable trade with sanction-hit nations such as Russia.

Vostro accounts are held by a bank on behalf of another bank, usually a foreign entity.

This type of arrangement is a key part of correspondent banking.

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