The Reserve Bank of India (RBI) has allowed the opening of nine special vostro accounts with two Indian lenders — UCO and IndusInd Bank — to facilitate overseas trade in rupee, Commerce Secretary Sunil Barthwal said on Tuesday.
Apart from the domestic lenders, Russia’s two largest banks — Sberbank and VTB Bank — are the first foreign lenders to have received approval from the central bank towards settling international trade transactions in rupee. “Nine accounts have been opened. One each in Uco Bank, SberBank, and VTB and six with IndusInd Bank. There are six different Russian banks who have opened special vostro account in IndusInd,” Barthwal said.
Another Russian bank, Gazprom, which does not have a branch in India, has also opened this account with Uco Bank.
In July, the RBI had unveiled a mechanism to settle international transactions in rupee to promote the growth of global trade, with emphasis on exports from India, as well as pushing rupee as an international currency. It is also expected to enable trade with sanction-hit nation such as Russia.
According to the mechanism finalised by the RBI, banks of partner countries can approach authorised dealer banks in India for opening special rupee vostro accounts. The authorised dealer bank will then have to seek approval from the central bank with details of such an arrangement.
Till now not even a single rupee trade transaction has taken place.
Barthwal said he had also held a meeting with officials of Uco Bank, the RBI and finance ministry’s Department for Financial Services to discuss ways to promote rupee trade.
“We want to promote rupee trade because that is in the nation’s interest. We would also not be looking unnecessarily for dollars. To the extent, rupee trade is possible, we will go for it,” he said.
India-UK FTA talks
The next round of free trade agreement (FTA) talks between India and the UK is expected in December, with an aim for closure of a substantial number of chapters, the secretary said. As of now, both nations have closed the majority of chapters — 16 out of 25 policy areas — so far.
Both nations missed the October 24, or Diwali, deadline to finalise the agreement as several issues remained unresolved. While India has adopted a fresh strategy to not work under the pressure of timelines, government officials said an internal target of March has been finalised.
As far as the FTA with the European Union is concerned, the third round of negotiation is scheduled in India from November 28 to December 9. Nineteen policy areas are scheduled in this round. A stock-taking meeting will be done by the end of 2022 or early 2023 to decide the way forward towards the FTA.
The December-deadline of the early harvest agreement between India and Canada is likely to be missed, officials said.