Several banks, including HDFC Bank and UCO Bank, have opened as many as 30 special vostro accounts as of date to facilitate overseas trade in the rupee, a top government official said on Wednesday. Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi said as of date, some 18 countries have already opened special vostro accounts with Indian banks.
“About 30 banks from overseas countries have signed up with 30 banks on our side, so 30 accounts…The transaction has started in bits and pieces,” he told reporters here.
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 announced the guidelines on overseas trade in the rupee in July last year.
Another Russian bank Gazprom, which does not have its unit in India, has also opened this account with Kolkata-based UCO Bank.
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.
Last year, the RBI and finance ministry 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.
When asked about the international currency in which India is paying Russia for oil, Commerce Secretary Sunil Barthwal said as energy trade is not under sanctions, energy trade from Russia is not impacted and normal banking channels are being used for payments.
Sarangi said that payments happen in different currencies, including euro, dollar, and dirham, and could be in yuan.
“It would be in any convertible currency,” Barthwal said.