RBI lets Vostro account holders invest surplus in G-Secs
Why in the news
RBI let foreign holders of Vostro balances invest all surplus funds in central government securities, so idle rupees can earn interest.
Key facts
- Vostro account: maintained by a domestic bank on behalf of a foreign bank to hold rupee balances from trade between India and other countries.
- New permission: the entire surplus can go into central government securities.
- Aim: promote international trade settlement in INR and deepen rupee trade arrangements.
Expected benefits
- Makes rupee trade deals more attractive to partners.
- Gives a secure, interest-bearing home for spare funds.
- Backs RBI’s strategy to internationalise the rupee.
Exam angle
- Vostro: domestic bank’s account for a foreign bank, in rupees.
- Instrument allowed: central government securities.
- Related term: internationalisation of the rupee.