The Reserve Bank of India (RBI) has approved the opening of nine special Vostro accounts with two Indian banks—UCO Bank and IndusInd Bank—to promote overseas trade in Indian rupees (INR).
- In July 2022, RBI released the guidelines for “International Trade Settlement in Indian Rupees (INR)”.
The nine banks that have opened special Vostro accounts are as follows:
- Sberbank and VTB Bank, the top two banks in Russia, opened accounts with their own branch offices in India and became the first foreign lenders to receive the approval.
- Russia’s Gazprombank, which has no branches in India, has also created this account with the state-run UCO Bank (Kolkata, West Bengal).
- Six different Russian banks have also opened accounts with IndusInd Bank.
What is a Vostro Account?
A “Vostro” account is an account that a domestic bank holds for a foreign bank in the currency of the domestic bank, which in India is INR.
- Rupee Vostro Accounts allow a foreign entity to keep its holdings in Indian banks in INR.
When an Indian importer makes a payment in INR to a foreign trader, the amount is deposited to this Vostro account.
- When an Indian exporter gets paid for supplying goods or services, the amount will be withdrawn from this Vostro account and credited to the exporter’s account.
Points to be noted – ‘Vostro and Nostro’
The account opened by an Indian bank in the foreign country is a “Nostro” account for the Indian bank, while it is a Vostro account for the foreign bank.
- In Latin, Nostro means “ours” and Vostro means “yours.”
As a result, accounts opened by IndusInd and UCO are Vostro accounts, while those opened by Russia’s Sberbank and VTB Bank are Nostro accounts.
Key Points:
i.UCO Bank already has a vostro account-based facility in Iran.
ii.Gazprombank, or GPB, is a privately owned Russian bank and the country’s third-largest bank by assets.
IFSCA Inks MoU with RBI in The Field of Regulation, Supervision of Regulated Entities
The International Financial Services Centres Authority (IFSCA) and the Reserve Bank of India (RBI) have signed a Memorandum of Understanding (MoU) to collaborate on regulation and supervision of regulated entities in their respective jurisdictions.
- The MoU facilitates technical cooperation and information exchange.
- The MoU opens up avenues for cooperation between the two regulators, thereby strengthening the safety, stability and soundness of respective financial ecosystems and nurturing environments conducive to optimal business development and economic growth.
International Financial Services Centres Authority (IFSCA)
The IFSCA is a unified authority for the development and regulation of financial products, financial services, and financial institutions at the International Financial Services Centre (IFSC) in India.
- The Gujarat International Finance Tec-City (GIFT City) is India’s first International Financial Services Centre (IFSC).
Prior to the foundation of IFSCA, the domestic financial regulators, including the RBI, the Securities and Exchange Board of India (SEBI), the Pension Fund Regulatory and Development Authority (PFRDA), and the Insurance Regulatory and Development Authority (IRDAI), regulated the business in the IFSC.
- The IFSCA was set up in accordance with the International Financial Services Centres Authority Act, 2019.
Chairman of IFSCA – Injeti Srinivas (First Chairperson of IFSCA)
Established – April 27, 2020
Headquarters – GIFT City, Gandhinagar in Gujarat.
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The Gujarat International Finance Tec City (Gift City) signed a Memorandum of Understanding (MoU) with Fintech Association of Japan (FAJ) to promote innovation and entrepreneurship in the fintech domain.
