Home / Industry / Banking /  HDFC Bank, Canara Bank get RBI nod for rupee trade with Russia: Report

The Reserve Bank of India (RBI) has allowed leading private sector lender HDFC Bank Ltd and state-run Canara Bank Ltd to open a special "vostro account" for trade in rupees with Russia, news agency Reuters quoted a report as saying on Monday.

Vostro accounts are accounts a bank holds on behalf of another, often foreign bank, and this forms a key part of correspondent banking.

As many as five Indian banks have received regulatory clearance for rupee trade till now. These includes UCO Bank, Union Bank and IndusInd Bank are the other three. 

This apart, two Russian banks have the central bank's approval – Sber Bank and VTB. Both have branch presence in India.

These Russian banks are the first foreign lenders to receive this approval after the RBI announced the guidelines on overseas trade in rupee in July. These banks have opened special vostro account in their respective branches in Delhi.

In September, the RBI and Finance Ministry had asked top management of banks and representatives of trade bodies to push exports and import transactions in the Indian currency.

At present, a large part of bilateral trade between India and Russia is getting settled in the rupee due to sanctions imposed by the US and Europe following Moscow's invasion of Ukraine.

The move to open the special vostro account clears the deck for settlement of payments in rupee for trade between India and Russia, enabling cross-border trade in the Indian currency, which the central bank is keen to promote.

The RBI has allowed the special vostro accounts to invest the surplus balance in Indian government securities to help popularise the new arrangement.

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