Special Rupee Vostro Accounts

Special Rupee Vostro Accounts

News: 20 Russian banks have opened Special Rupee Vostro Accounts (SRVA) with partner banks in India.

What are SRVA?
 SRVA is an account that domestic banks hold for foreign banks in the former’s domestic currency, the rupee, which allows domestic banks to provide international banking services to their clients who have global banking needs without having to be physically present abroad.
 The SRVA is an additional arrangement to the existing system that uses freely convertible currencies and works as a complimentary system.
 It has 3 important components to it: I) All exports and imports must be denominated and invoiced in domestic currency (e.g. Rupee) II) The exchange rate between the currencies of the trading partner countries would be market-determined III) The final settlement also takes place in domestic currency (e.g. Rupee)

What are eligibility criteria?
 Banks include approval from the apex banking regulator (e.g. RBI)
 The correspondent bank is not from a country mentioned in the updated FATF Public Statement on High Risk & Non-Co-operative jurisdictions
 All reporting of cross-border transactions is to be done in accordance with the extant guidelines under the Foreign Exchange Management Act (FEMA), 1999. V

Benefits
It could reduce net demand for Foreign Exchange
Reduce the need for Holding Forex reserves
Helps facilitate currency be resilient to external shock
Internationaliza tion of Indian Rupee