RBI Expands Investment Options for Special Rupee Vostro Accounts in INR Trade Settlement [Read Circular]
RBI allowed surplus balances in Special Rupee Vostro Accounts to be invested in corporate instruments like NCDs, bonds, and commercial papers, expanding options beyond government securities.
INR - RBI - Taxscan
INR - RBI - Taxscan
The Reserve Bank of India (RBI), through its A.P. (DIR Series) Circular No. 14 dated October 03, 2025, announced a major step towards deepening the use of the Indian Rupee (INR) in international trade settlements. The notification allows surplus balances held in Special Rupee Vostro Accounts to be invested in a wider range of financial instruments, providing more flexibility and opportunity for partner countries and banks engaged in trade with India.
Earlier, under the RBI’s A.P. (DIR Series) Circular No. 10 dated July 11, 2022, banks maintaining Special Rupee Vostro Accounts were allowed to invest the funds only in Government Treasury Bills and Government Securities, as per the existing guidelines under the Foreign Exchange Management Act (FEMA), 1999.
This was part of RBI’s initiative to promote settlement of international trade in Indian Rupees, helping reduce dependence on foreign currencies like the US dollar.
With the new circular issued on October 03, 2025, the RBI has expanded the scope of permissible investments. Now, Authorised Dealer Category-I Banks (AD-I Banks) can allow the surplus balances in these Special Rupee Vostro Accounts to be invested in Non-Convertible Debentures (NCDs), bonds, and commercial papers issued by Indian companies.
This move comes in line with the directions issued through AP DIR Circular No. 13, also dated October 03, 2025, which lays down the specific guidelines and limits for such investments. The change is effective immediately, and all AD-I banks have been instructed to inform their clients and constituents about the updated rules.
According to the RBI, this measure is expected to boost the international acceptability of the Indian Rupee, encourage foreign participation in Indian corporate debt markets, and strengthen economic ties with countries that have begun trading with India in INR.
These directions are issued under Sections 10(4) and 11(1) of the FEMA, 1999, and are subject to compliance with any other laws or approvals required. The RBI emphasized that this move aligns with India’s broader goal of making the rupee a globally accepted trade currency and supporting the country’s “Make in India” and export promotion efforts.
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