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Vostro Account SRVA: RBI Asks to Lift 30% T-Bill Cap

3 May 20251 min read
ECONOMYVostro AccountSRVA: RBI Asks toLift 30% T-Bill Cap3 May 2025safalsetu.com

Why in the news

The central bank wants government approval to drop a limit on how much of their rupee balances foreign banks can park in short-dated government paper.

Key facts

  • SRVA: Special Rupee Vostro Account, set up by RBI in 2022; foreign banks keep rupee balances through domestic banks without registering as FPIs.
  • Present rule: only 30% may go into sovereign debt maturing within a year, including treasury bills.
  • Cap was meant to favour long-term inflows and curb speculative short-term flows.

RBI’s case

  • The limit discourages SRVA use and hampers liquidity management; participants called it a major operational barrier.

Significance

  • More rupee trade settlement and wider acceptance of the rupee.
  • If approved: more foreign interest in rupee assets and demand for short-term sovereign debt.

Exam angle

  • SRVA = Special Rupee Vostro Account (2022); current cap 30%.

Test yourself

1. What does SRVA stand for in RBI's rupee trade settlement framework?

SRVA is the Special Rupee Vostro Account introduced in 2022.

2. What share of SRVA balances can currently go into short-term sovereign debt, a cap RBI wants removed?

Existing norms allow only 30% in such instruments.

3. Which ministry did RBI write to seeking removal of the cap on SRVA short-term investments?

RBI wrote to the Finance Ministry.

This topic is part of Daily Current Affairs 3 May 2025 (19 topics).

All topics of the dayDay quizMay 2025

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