RBI Relaxed Procedures for Opening Special Rupee Vostro Accounts

Current Context: On August 5, 2025, RBI eased norms for opening Special Rupee Vostro Accounts (SRVAs) by removing the need for prior approval.

• Now, Authorised Dealer (AD) banks can directly open SRVAs for foreign banks to facilitate INR-based trade settlements.
• This move supports the internationalisation of the Indian Rupee and simplifies cross-border transaction procedures.
• SRVAs are crucial for countries trading with India in rupees, especially those facing dollar constraints or sanctions.
• The reform is expected to boost bilateral trade, particularly with nations like Russia, Sri Lanka, and UAE.
• Banks must still comply with FEMA regulations, KYC norms, and conduct proper due diligence.
• It aligns with India’s broader strategy to promote rupee as a global trade currency.

Question:

Q.1 Under the revised guidelines, which category of banks can directly open Special Rupee Vostro Accounts for foreign banks without prior RBI approval?
a) Foreign Central Banks
b) Authorised Dealer Banks
c) Export Promotion Councils
d) All Scheduled Commercial Banks

Answer: b) Authorised Dealer (AD) Banks—banks authorised by the Reserve Bank of India to deal in foreign exchange—can now directly open SRVAs for foreign banks, subject to compliance with the Foreign Exchange Management Act (FEMA), Know Your Customer (KYC) norms, and due diligence requirements.