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Nasscom's feedback on the use of Special Rupee Vostro Account mechanism
Nasscom's feedback on the use of Special Rupee Vostro Account mechanism

August 31, 2023

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We participated in a meeting of the Working Group set-up by the Central Government to identify the issues in using the Special Rupee Vostro Account (SRVA) mechanism for international transactions. The meeting also discussed recommendations for creating necessary enablers in order to popularise the SRVA mechanism. 

We highlighted the following:

  1. Acceptance for this mechanism must come from the corresponding exporter/importer in the overseas jurisdiction, in case they decide to bear the exchange risk.
  2. In using a rupee vostro account, if the overseas party is accepting/sending the payment in a foreign currency, currency conversion to INR will happen. It is likely that the cost of that conversion and exchange risk will be built into the commercial terms between Indian party and foreign party. Therefore, there is no monetary advantage for Indian party to use SRVA, in case the conversion cost and exchange risk is being borne by him.
  3. The Special Rupee Vostro Account is opened with the bank and processing is done directly by the bank. SME exporters/importers are increasingly preferring to choose the OPGSP route because of the convenience and ease, instead of having to deal with the bank directly. Hence, less adoption.
  4. Most of the contracts are not in INR, they are in USD. Hence existing contracts are continuing payment in USD.
  5. Not all countries are yet comfortable with INR. It will take time to build this acceptance.

If you are interested in discussing this topic further, kindly write to garima@nasscom.in with a copy to policy@nasscom.in

 


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Garima Prakash
Manager, Public Policy and Government Affairs

Reach out to me for all things policy about e-commerce, international trade, export controls, start-ups and fintech

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