As many as nine special vostro accounts have been opened with two Indian banks after permission from the Reserve Bank of India 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 announced the guidelines on overseas trade in the 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 6 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 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.
On when the rupee trade will begin with Russia, the secretary said there is a process involved in it and hopefully it would materialise soon.
Barthwal said he held a meeting with officials of UCO Bank, RBI and the Department for Financial Services and discussed ways to promote rupee trade.
“We want to promote rupee trade because that is in the nation’s interest. We would also not be looking unnecessarily for dollars. To the extent, rupee trade is possible, we will go for it,” he added.