Why in news?

 Nine Russian banks open Vostro accounts for rupee trade for import and export activities

Highlights

• Russia is the only country to engage with India’s rupee based trade offer
• For rupee trade to happen, you require a balance of trade because it is not an international currency

What is Vostro account?

• It is an account that a domestic bank holds for a foreign bank in the domestic bank’s currency which, in the case of India, is the rupee.
• The RBI allowed nine such accounts, including IndusInd Bank and Uco Bank.
• In the case of trade with Russia, payments in rupee for the export and import of goods will go to these Vostro accounts.
• The owners and beneficiaries of this money will be the exporters and importers in both the countries. The banks will keep the record of money transferred.
• The RBI has allowed the special vostro accounts to invest the surplus balance in Indian government securities to help popularise the new arrangement.