RBI Allows Non-Residents to Invest Trade Surplus from SRVAs in Government Securities [Read Circular]

This is to provide more avenues for deploying surplus funds from international trade settlements conducted in Indian Rupees.

The RBI explained that this decision builds on the framework of the Foreign Exchange Management (Debt Instruments) Regulations, 2019, and the Foreign Exchange Management (Deposit) Regulations, 2016, as well as the Master Direction – Non-Resident Investment in Debt Instruments dated January 7, 2025.

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Under the earlier rules, SRVAs were introduced in July 2022 to facilitate settlement of international trade in INR, thereby reducing dependency on third-country currencies such as the US dollar.

According to the new circular, the Foreign residents holding Special Rupee Vostro Accounts (SRVAs) can now:

• Invest their rupee surplus (i.e., the balance remaining in the SRVA after trade settlements),
• Directly into Indian government debt instruments, including:
• Central Government Securities
• Treasury Bills

The RBI pointed out that operational guidelines for implementing this facility have already been incorporated into the updated Master Direction, which comes into effect immediately. Authorised Dealer Category-I banks have been asked to inform their clients and guide them through the process of investing SRVA surpluses in G-Secs.

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According to the central bank, these directions have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999. They are also subject to compliance with other applicable laws where required.

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