New Delhi: Indian banks have witnessed a significant surge in vostro accounts as 22 countries embrace the local currency for trade, aligning with their gradual de-dollarisation strategies. This milestone development was revealed during a parliamentary session on Friday.
In simple terms, vostro accounts empower domestic banks to cater to international clients seeking global banking services.
The Union Minister of State (External Affairs), Rajkumar Ranjan Singh, disclosed the list of countries that have adopted this mechanism, and it's an impressive lineup. The countries include Belarus, Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda, Bangladesh, Maldives, Kazakhstan, and the United Kingdom.
The government is actively collaborating with India's trading community, especially Small and Medium Enterprises (SMEs), to streamline administrative procedures and ensure the smooth implementation of this groundbreaking initiative.
To promote the growth of global trade, with a particular emphasis on India's exports, the Reserve Bank of India introduced a mechanism last year that allows transactions in domestic currencies. This move also aimed to increase interest in the Indian Rupee.
Following the RBI's announcement on July 11, 2022, regarding invoicing and payments for international trade in Indian Rupee, the internationalisation of the rupee has gained momentum. Experts believe that if this mechanism proves successful, it could lead to the widespread acceptance of the Indian Rupee as a global medium of exchange in the long run.
The adoption of vostro accounts by these countries marks a significant step toward enhancing India's position as a global hub for rupee trading.
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