17 March 2023

The Reserve Bank of India (RBI) has recently allowed banks from 18 countries to open the so-called ​Special Vostra Rupee Accounts (SVRA) for settling payments in Indian rupees. This reduces the ​demand for the freely tradeable currencies (such as the US dollars) in exports and imports.

How does it work?

1. Banks from the 18 permitted countries can open Indian Rupee accounts (Vostro account) in partner ​banks in India.

2. Partner banks in India must be an authorised domestic dealer in India. “Authorised domestic dealer ​banks” are those authorised to deal in foreign currencies.

3. Banks from permitted countries are to approach an authorised Indian bank for SVRA. The Indian ​would then seek approval from RBI, providing details of the arrangement.

4. Indian authorised banks can open multiple SRVAs from different banks from permitted countries.

5. This arrangement is in addition to the exiting freely tradeable currencies (USD etc.) and is not a ​replacement to such existing arrangements.

6. The target is to ease export and import demand for non-INR currencies and easy the pain of reserve ​currencies.

7. Three main components are i) invoicing ii) exchange rate iii) settlement.

a.Invoicing must be in INR.

b.Exchange Rate is market-determined.

c.Settlement should be in INR

8. Imports: Importers in India would receive invoices in INR. Subsequently the importers in India will ​pay in INR in the Vostra accounts of the partner countries. For example, India buys machinery from ​Germany. Germany will invoice the importer in India in INR. The importer in India will pay into the vostro ​account in INR. So invoicing and settlement is completed in INR without the requirement to convert it ​into USD or EUR in-between.

9. Exports: Indian exporters can invoice in INR. Indian exporters will be paid in INR from the vostro ​accounts of the permitted countries. Again, skipped freely tradeable currencies and completing the ​settlement in INR.

10. The 18 countries that are currently permitted by the RBI include Germany and the UK. Full list below:


b.United Kingdom

c.And Fiji, Guyana, Israel, Kenya, New Zealand, Malaysia, Mauritius, Oman, Russia, Seychelles, ​Botswana, Singapore, Sri Lanka, Tanzania, Uganda, and Myanmar.

11. More then 60 SVR accounts have so far been opened from the 18 permitted countries.

The INR is not a competitor to the world’s leading reserve and trading currency, the US dollar. ​However, being a large importing country, the SVRAs are expected to reduce the burden of India to ​trade in the reserve currency.


  1. The Hindu