With the permission of the Reserve Bank of India, Vostro accounts have been opened by two Russian banks in India. This has been done to stimulate trade overseas in rupees.
The two banks are Sberbank and VTB Bank. These two banks are the largest and second biggest banks in Russia respectively. These two banks are also the first lenders abroad to receive this consent from the RBI.
After acquiring approval for the first time on overseas policies, banks have created a different kind of account named as Vostro account. Sources said the accounts have been created in their respective departments in Delhi.
This doesn’t end here as last month, that is, in September, UCO bank of India also received the approval of RBI to create the Vostro account with the Russian Bank Gazprombank.
Earlier, UCO Bank had already made a special Vostro arrangement with Iran. Gazprombank (GPB) is a private bank owned by the Russian Government and is the third major bank in the country by acquisitions. It is also one of the biggest lenders in the country.
Obeying the Reserve Bank of India’s decision to facilitate the Indian banknotes Rupee, the Kolkata-based bank became the first to acquire authorization on this matter during this month. The reason behind opening a special Vostro account is to clear the roads for the concession of payments in rupees between India and Russia. This will encourage people to go for inter-country trade that will ultimately promote the Indian currency, Rupee.
RBI has not just tried to encourage Rupee but also entitled the Vostro accounts to finance the credit proportion in the Indian securities that will help to popularize the plan further. In September, RBI along with the Finance Ministry asked the top ambassadors of different banks and trading corporations across the nation to encourage export and import in Rupees. The main aim to promote rupees is to connect India with different countries by opening Vostro accounts that will facilitate its currency rather than using US dollars.
In a report, RBI said that exports and imports made under this process will help to promote INR which will be later credited into the Vostro accounts of the partnered banks. Moreover, RBI trying to make payments in INR will also help tea exporters as this will aid tea exporters in the future. To add, India is the biggest exporter of tea in Russia.