Act Name/Rule Name: Reserve Bank on India Act, 1934
Type of Document: Press Release
Date: January 16, 2025
Circular No./Notification No.: Press Release: 2024-2025/1940
To promote the use of Indian Rupee (INR) for trade transactions, the Reserve Bank of India introduced Special Rupee Vostro Accounts (SRVA)* in July 2022. This initiative has gained traction with several foreign banks opening SRVAs in India. Furthermore, agreements have been made with the central banks of the UAE, Indonesia, and Maldives to encourage cross-border transactions in local currencies.
The Reserve Bank has made further revisions to the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, expanding the scope of cross-border transactions. Overseas branches of Authorised Dealer banks can now open INR accounts for foreign residents to facilitate transactions with residents in India. Additionally, non-residents can use balances in repatriable INR accounts for various purposes, including foreign investments and trade.
The liberalization of FEMA regulations allows greater flexibility for cross-border transactions in INR and local currencies. These changes will streamline foreign investment, trade settlements, and financial flows, boosting India’s role in global trade.
* A Special Rupee Vostro Account (SRVA) is a bank account that allows Indian banks to settle international trade in rupees.
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