RBI Allows AD Banks to Open Rupee Vostro Accounts Without Prior Approval [Read Circular]
RBI allows banks to open Special Rupee Vostro Accounts for foreign partners without prior approval to promote international trade in Indian Rupees.
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The Reserve Bank of India (RBI) issued Notification No. RBI/2025-2026/71 dated August 05, 2025, announcing the important update for the International Trade Settlement in Indian Rupees (INR). RBI has now allowed Authorised Dealer (AD) Category-I banks to open Special Rupee Vostro Accounts (SRVAs) of overseas correspondent banks without needing prior RBI approval.
A Special Rupee Vostro Account is an account held by a foreign bank with an Indian bank in Indian Rupees. This account allows foreign companies to pay Indian exporters in Rupees instead of using foreign currencies like US Dollars or Euros. This process reduces the dependency on major foreign currencies and strengthens the role of the Indian Rupee in global trade.
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The RBI has instructed all Category-I Authorised Dealer (AD) banks to take note of this change and inform their customers and business partners. The permission has been granted under Sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999.
The RBI further clarified that separate approval from them is not required but banks must still follow all other applicable rules and regulations.
The RBI’s new update on Special Rupee Vostro Accounts (SRVAs) is likely a smart step to give India more economic freedom especially with U.S. tariffs and pressure to stop buying Russian oil.
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By pushing trade in Indian Rupees, India may be trying to depend less on the U.S. dollar, boost trade with countries like Russia, and soften the blow of U.S. trade rules. We’re not sure if this is because of US pressure but the timing makes it seem like it could be part of India’s plan to keep its energy supply safe and stay economically independent or maybe it's just a pre-existing plan to internationalize the INR.
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