RBI allowed banks to open additional current accounts for export proceeds

The Reserve Bank of India has allowed the opening of additional current accounts apart from special Vostro accounts. The RBI had decided to allow the settlement of India’s international trade in rupees in July 2022. Foreign bank holdings in this account opened in Indian banks are held in rupees. Similarly, the amount deducted from the payment to the merchant is also deducted from the account.

The RBI on Friday allowed the opening of additional current accounts in rupees, apart from the special Vostro account, for proceeds from exports. This step has been taken to make things easier for the exporters on the operational front. In fact, the RBI had decided to allow the settlement of India’s international trade in rupees in July 2022.

Under this, authorized Indian banks are allowed to open special rupee vostro accounts of banks in partner trading countries. In this account opened in an Indian bank, the share of the foreign bank is kept in Rs. When an Indian merchant wants to pay a foreign merchant in Rupees, the amount will be deposited into this Vostro account. Similarly, in contrast, the amount paid to an Indian merchant is deducted from the Vostro account and credited to the individual’s regular account.