Vostro accounts have been opened by many banks to facilitate foreign trade in rupees. (file)
Rome:
Commerce and Industry Minister Piyush Goyal today said that international trade in domestic currency will help in reducing transaction cost for industry and many countries are discussing it with RBI.
Last year, the RBI and the finance ministry had asked the top management of banks and representatives of trade bodies to promote export and import transactions in rupees. They want banks in India to join their foreign counterparts in opening special rupee vostro accounts to facilitate cross-border trade in Indian currency instead of the popular mode of US dollars.
Piyush Goyal said that today many countries are realizing that trade requires currency conversion and involves conversion cost, which also increases the transaction cost.
“We can solve these issues through rupee trading (arrangements),” he told reporters here, adding that several countries are discussing the subject with the RBI.
Several banks including HDFC Bank and UCO Bank have opened special Vostro accounts to facilitate foreign trade in rupees as on date.
Sberbank and VTB Bank – Russia’s largest and second largest banks respectively – are the first foreign lenders to receive approval after the RBI announced guidelines on foreign trade in rupees in July last year.
Another Russian bank Gazprom, which does not have a unit in India, has also opened this account with Kolkata-based UCO Bank.
The move to open the special Vostro account clears the decks for settlement of payments in rupees for trade between India and Russia, enabling cross-border trade in the Indian currency, which the RBI seeks to promote.
The Reserve Bank of India has allowed special Vostro accounts to invest surplus balances in Government of India securities to help popularize the new system.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)