RBI permits Opening of additional Current Account in Indian Rupees for exports proceeds

The Reserve Bank of India (RBI) on Friday permitted banks to open additional current account for exports proceeds in addition to special rupee vostro accounts with a view to provide greater operational flexibility to exporters.In terms of this provision and in order to provide greater operational flexibility to the exporters, AD Category-I banks maintaining Special Rupee Vostro Account as per the provisions of the Reserve Bank circular dated July 11, 2022, referred to above are permitted to open an additional special current account for its exporter constituent exclusively for their export transactions.

India has been trying to promote rupee trade following the Russia-Ukraine war and the sanctions imposed by the West. In July 2022, the RBI asked banks to put in place additional arrangements for export and import transactions in Indian rupees in view of the increasing interest of the global trading community in the domestic currency.

“In order to promote the growth of global trade with an emphasis on exports from India and to support the increasing interest of the global trading community in INR, it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports and imports in INR,” it said.

These accounts keep the foreign bank’s holdings in the Indian counterpart in rupees. When an Indian trader wants to make a payment to a foreign trader in rupees, the amount will be credited to this Vostro account.

Similarly, in the reverse scenario, the amount to be paid to an Indian trader is deducted from the Vostro account and credited to the person’s regular account.