Non-residents can invest their surplus balances in special rupid vostro accounts in G-SECs

This targeted measure reinforces the market depth and provides stability without resorting to changes or large -scale open market activities, while the role of rupees in cross -border trade arrangements reinforced, he added | Photocredit: Francis Mascarenhas

The Reserve Bank of India (RBI) has permitted non-residents to maintain a special rupid vostro account (SRVA) for international trade arrangements in Indian rupees to invest their surplus balance in this account in the central government effects (including treasury accounts).

This step comes in the aftermath of the Central Bank last week that simplifies the procedure for opening SRVAs, whereby banks are authorized to act in currency (advertisements) no longer required to request previous approval from the Central Bank for opening SRVAs from Correspondent Foreign Banks. .

Venkatakrishnan Srinivasan, founder and managing partner, Rockfort Fincap LLP, noted that such investments will follow the same total limits and provisions that apply to foreign portfolio investors (FPIs) under the general route, but with an important relaxation-srva investment its exempt from the roads are released.

The Circular also puts the responsibility for authorized dealing category I banks to open special security accounts for SRVA holders, to give them access to the NDS-Om-trading platform, reporting all transactions and ensuring compliance with the applicable regulations.

Global and domestic factors

Venkatakrishnan said: “The timing of the Tweak in the Master’s direction is remarkable: with the 10-year G-SEC yield in the direction of 6.50 percent, the rupid weakened on global and domestic factors, and traders who anticipate an extensive policy break, has been the demand for long-term government papier luw.

“By making inactive rupid balance built up by making trade settlements possible to be channeled directly in the G-SEC market, RBI broadens the investor base, stimulating the potential demand at auctions and adds a supporting layer of liquidity.”

This targeted measure strengthens the market depth and provides stability without resorting to changes or large -scale open market activities, while strengthening the role of rupees in cross -border trade arrangements, he added.

Published on August 12, 2025