20 Russian banks, including Rosbank, Tinkoff Bank, Centro Credit Bank and Credit Bank of Moscow have opened Special Rupee Vostro Accounts (SRVA) with partner banks in India.

20 Russian banks, including Rosbank, Tinkoff Bank, Centro Credit Bank and Credit Bank of Moscow have opened Special Rupee Vostro Accounts (SRVA) with partner banks in India.

• All major domestic banks have listed their nodal officers to sort out issues faced by exporters under the arrangement.

SRVA arrangement

• A vostro account is an account that domestic banks hold for foreign banks in the former’s domestic currency, in this case, the rupee. Domestic banks use it to provide international banking services to their clients who have global banking needs. 
• It is an integral offshoot of correspondent banking that entails a bank (or an intermediary) to facilitate wire transfer, conduct business transactions, accept deposits and gather documents on behalf of the other bank. It helps domestic banks gain wider access to foreign financial markets and serve international clients without having to be physically present abroad.

Function

• The framework entails three important components, namely, invoicing, exchange rate and settlement. Invoicing entails that all exports and imports must be denominated and invoiced in INR. The exchange rate between the currencies of the trading partner countries would be market-determined.
• To conclude, the final settlement also takes place in Indian National Rupee (INR). The authorised domestic dealer banks (those authorised to deal in foreign currencies) are required to open SRVA accounts for correspondent banks of the partner trading country. Domestic importers are required to make payment (in INR) into the SRVA account of the correspondent bank against the invoices for supply of goods or services from the overseas seller/supplier. Similarly, domestic exporters are to be paid the export proceeds (in INR) from the balances in the designated account of the correspondent bank of the partner country.