Banks working towards speedy opening of Vostro accounts: IBA Chief

NEW DELHI : The Indian Rupee will soon be used for foreign trade as many countries wish to engage in bilateral trade and India is promoting trade in its own currency, Sunil Mehta, Chief Executive of Indian Banks’ Association (IBA), said. He confirmed that member banks of IBA are working in full swing to ensure that the process of opening Vostro account is done at a rapid pace.

India has focused on the promotion of bilateral trade after the Russia-Ukraine war broke out in 2022. IBA Chief assured that banks are taking effective measures to ensure foreign trade transactions are carried out smoothly in Rupees from the Vostro account of banks of other countries in India.

One of the major advantage of having foreign trade in Indian rupees is that it will reduce currency conversion cost, and thus, the price of imported goods is likely to reduce in India. 

“Small traders will also be able to export and import with other countries in rupees,” the IBA chief added.

He further stressed on the fact that the e-commerce platforms will also get export benefits once full-fledged bilateral trade begins in Indian currency. The export model is likely to follow the model of B2C business.

Sunil Mehta also shared that the Ministry of Commerce is working effectively to start conducting foreign trade in Rupees.

In July 2022, the Reserve Bank of India set the rules and regulations to start invoicing, payment and settlement of exports and imports in rupees via special Rupee Vostro accounts with overseas banks. Official information on actual trades done so far has not been released in public, but it is evident from the initiatives of the central bank and the concerned departments that policymakers are taking all possible measures to encourage greater internationalization of the Rupee.