Winning Bizness Desk
Mumbai. The Reserve Bank of India has allowed two leading banks of the country, HDFC Bank and Canara Bank, to do business with Russia in rupees by opening special Vostro accounts. Vostro accounts are accounts that one bank maintains on behalf of another, often a foreign bank. It is an important part of any banking transaction. The central bank has taken this step to facilitate the settlement of trade between India and Russia in rupees. After this decision, now cross border transactions can be done in Indian currency as well.
Govt opened nine special vostro accounts
Earlier, the government had opened nine special vostro accounts with two Indian banks after permission from the Reserve Bank of India (RBI) to facilitate foreign trade in Indian rupees. Explain that Russia's largest and second largest banks Sberbank and VTB were the first overseas lenders to receive approval after the RBI announced guidelines for foreign trade in rupees in July. Another Russian bank, Gazprom, which does not have any branch in India, opened a Vostro account with Kolkata-based UCO Bank.
Special accounts to invest surplus funds
Releasing the business figures, Commerce Secretary Sunil Barthwal had said that nine Vostro accounts have been opened so far. Out of which one has been opened in UCO Bank, one in SberBank, one in VTB Bank while six have been opened with IndusInd Bank. These are six different banks in Russia. The Reserve Bank of India has allowed these special Vostro accounts to invest surplus funds in Government of India securities to help popularize the new system.