India broadens access to ‘vostro’ accounts to facilitate rupee trade

(Reuters) – India has allowed banks in 22 partner countries, including Russia and the United Kingdom, to open “vostro” accounts in the country, the government told parliament on Tuesday, to help facilitate trade in rupees.

Vostro accounts are accounts a domestic bank typically holds on behalf of a foreign bank, denominated in the currency of the former.

India has been encouraging partner countries to promote trade denominated in rupees, keen to cut transaction costs associated with currency conversions.

The Reserve Bank of India has allowed banks from 22 countries, including Bangladesh, Russia, Germany, Israel, Sri Lanka and UK, among others, Bhagwat Karad, India’s junior finance minister told parliament.

Other countries whose banks have been permitted to open accounts are Botswana, Fiji, Guyana, Kazhakstan, Kenya, Malaysia, Maldives, Mauritius, Myanmar, New Zealand, Oman, Belarus, Seychelles, Singapore, Tanzania and Uganda, Karad said.

(Reporting by Shilpa Jamkhandikar; editing by Christina Fincher)