The Reserve Bank of India (RBI) has permitted banks in India to open Vostro accounts from 22 countries for trade in rupees. This will help to promote bilateral trade between India and these countries and reduce the need for foreign exchange.
A Vostro account is a bank account that is held by a foreign bank in India. It is called a "Vostro" account because it is from the perspective of the Indian bank. The foreign bank uses this account to hold rupees that it has received from Indian customers or businesses.
The RBI's decision to allow banks to open Vostro accounts from 22 countries is a significant step towards promoting bilateral trade in rupees. It will make it easier for Indian businesses to trade with businesses in these countries and will reduce the need for foreign exchange. This will save businesses money and make it easier for them to do business.
The RBI has also said that it will continue to review the list of countries eligible to open Vostro accounts in India. This means that the list of countries could be expanded in the future.
Here are some of the benefits of opening Vostro accounts from 22 countries for trade in rupees:
- It will make it easier for Indian businesses to trade with businesses in these countries.
- It will reduce the need for foreign exchange.
- It will save businesses money.
- It will make it easier for businesses to do business.
The RBI's decision to allow banks to open Vostro accounts from 22 countries is a positive development for the Indian economy. It will help to promote bilateral trade and make it easier for businesses to do business.
What is Vostro account?
A Vostro account is a bank account that is held by a foreign bank in India. It is called a "Vostro" account because it is from the perspective of the Indian bank. The foreign bank uses this account to hold rupees that it has received from Indian customers or businesses.
Vostro accounts are an essential part of correspondent banking, which is a relationship between two banks that allows them to provide services to each other's customers. For example, if a Spanish bank has a Vostro account with an Indian bank, it can use that account to process payments from Indian customers.
Vostro accounts are also used to facilitate trade between countries. For example, if a Chinese company wants to import goods from India, it can wire money to the Indian company's Vostro account at a Chinese bank. The Indian company can then withdraw the money from its Vostro account at an Indian bank.
Vostro accounts are a valuable tool for businesses that trade internationally. They can help to reduce the cost of foreign exchange transactions and make it easier to do business with foreign customers.
Here are some of the key features of Vostro accounts:
- They are held by a foreign bank in India.
- They are denominated in rupees.
- They are used to hold funds that have been received from Indian customers or businesses.
- They are an essential part of correspondent banking.
- They are used to facilitate trade between countries.
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