RBI allows non-residents to invest rupee surplus in vostro accounts in G-secs

Mumbai: The Reserve Bank of India (RBI) on Tuesday said non-residents maintaining special rupee vostro accounts (SRVA) can invest surplus balances in central government securities (G-secs).

“Persons resident outside India that maintain a SRVA for international trade settlement in Indian Rupees -- may invest their rupee surplus balance in the aforesaid account in central government securities (including Treasury Bills),” the central bank said in a notification.

In a communication to all authorised dealer category-I banks, it said the directions take effect immediately and asked the banks to communicate the same to their clients.

The RBI said operational instructions in this regard have been incorporated in the ‘Master Direction’ on the subject.

The SRVA accounts are usually opened by foreign entities with an Indian bank to help settle international trade transactions in rupee.

The notification comes days after the RBI simplified the process to open the SRVAs in an effort to boost rupee trade. It can be noted that RBI Governor Sanjay Malhotra had recently said India is working on popularising trade in its own currency like any other country.