From Russia with love: Corporate bonds may get Vostro funds to boost trade settlement in rupee
India is considering a plan to allow surpluses in Special Rupee Vostro Accounts (SRVAs) to be invested in corporate bonds in order to give a push to international trade settlement in rupees. Under existing regulations, investment from SRVAs is restricted to government securities and treasury bills.
«We have received some recommendations after deliberations with all stakeholders, including banks and trade bodies,» an official said.
«They are being examined.» It has been suggested that allowing investment in corporate bonds through SRVAs will attract more such bilateral agreements, he said. A vostro account is held at a bank on behalf of another lender that's typically located in a foreign country.
Earlier this year, Russian officials said that Moscow had accumulated billions of rupees in Indian banks that couldn't be used.
Industry estimates peg this amount at $7-8 billion. Until July 2, the RBI had approved 34 applications from different Russian banks for opening SRVAs in 14 Indian commercial lenders.
Around 90% of the transactions with Russia are through Sberbank India. An industry executive said annual trade through the SRVA route is pegged at around Rs 8,300 crore, of which 70% is exports with mostly medium and small enterprises using the facility.
