Brief Overview:
What started as a rupee trade-settlement route, has now evolved into a much larger role. With a consolidated framework and updated FAQs, Special Rupee Vostro Accounts (“SRVAs”) can now operate as a practical INR channel for investment, treasury and settlement flows besides eligible cross-border trade. Another step up for using INR more actively in international transactions.
Technical Details:
What changes now
1) SRVAs move beyond trade settlement: SRVAs may now support all permissible current and capital account transactions under FEMA, including FDI and ECB-related flows. RBI has also clarified that settlements between non-residents and merchanting trade transactions may be routed through SRVAs.
2) Greater flexibility to fund and use INR balances: SRVAs may be funded through inward remittances, transfers from other repatriable INR accounts and proceeds of permissible transactions under the FEMA Act 1999 which regulates cross-border transactions and payments. This gives overseas banks and eligible users more flexibility in deploying INR balances.
3) Surplus INR can be invested and hedged: Surplus SRVA balances may be invested in permissible debt instruments. Overseas banks investing SRVA funds in government securities and T-Bills do not require FPI registration. INR exposures arising from SRVA balances may be hedged under applicable foreign exchange regulations.
4) Lower operational friction for banks: RBI has consolidated the SRVA framework into a single rulebook. Also permitted AD banks to open SRVAs for overseas banks and their overseas branches without separate RBI approval. SRVA details can be now published through FEDAI’s SRVA Directory.
Takeaways:
SRVAs flows are now easier to use, operationalise and integrate into cross-border INR flows. For foreign banks, multinational corporates and treasury teams, the consolidated framework offers a cleaner route to invoice, settle, deploy surplus INR balances and manage exposures within FEMA. This is a timely step towards making the rupee attractive for international trade, investment and treasury activity.
For further details, please see:
For any queries/clarifications, please feel free to ping us and we will be happy to chat:
- Jayesh H (Jayesh.h@juriscorp.in)
- Mahak Saboo (mahak.saboo@juriscorp.in)
● Khushi Singh (khushi.singh@juriscorp.in)
