The opening of the special vostro account makes it possible for payments to be settled in rupees for trade between Russia and India, facilitating cross-border Indian currency trading, which the RBI is eager to encourage.Commerce and Industry Minister Piyush Goyal stated on Thursday that several nations are in discussions with the RBI regarding reducing transaction costs for the industry through international trade in the local currency.The top bank executives and trade body representatives were urged by the RBI and Finance Ministry to encourage export and import transactions in rupees last year. They desire Indian banks to establish special rupee vostro accounts with their overseas counterparts in order to enable cross-border trade in Indian currency as opposed to the widely used mode of the U.S dollar.
According to Mr. Goyal, a number of nations are now realising that currency conversion is necessary for trade and that this raises the cost of transactions as well.He told reporters here, “We can address these issues through rupee trade (arrangement),” and mentioned that the RBI is in talks with several countries about the matter.As of right now, a number of banks have opened special vostro accounts to enable international trade in rupees, including HDFC Bank and UCO Bank.The RBI announced guidelines on overseas trade in the rupee in July of last year. The first foreign lenders to receive approval are Sberbank and VTB Bank, which are the largest and second-largest banks in Russia, respectively.
An additional Russian bank Additionally, Kolkata-based UCO Bank has opened this account for Gazprom, which does not have a unit in India.The opening of the special vostro account makes it possible for payments to be settled in rupees for trade between Russia and India, facilitating cross-border Indian currency trading, which the RBI is eager to encourage.The RBI has allowed the special vostro accounts to invest the surplus balance in Indian government securities to help popularise the new arrangement.
India’s economy has grown to be the fifth largest in the world as a result of several steps the government has taken to promote economic growth.According to him, the rupee used to depreciate between three and five percent a year, but it has now stabilised.After the Modi-government came to power in 2014, the rate of depreciation has come down to about 1.5 per cent.”This will decrease even more over the next ten years, to roughly 0.5-0.75 percent. “In my opinion, the rupee will begin to appreciate in 8 to 10 years, which will lead to faster growth in the Indian economy,” he continued.
