RBI removes prior approval requirements for banks to open SRVAs, speeding up rupee-based trade settlements and supporting the internationalization of the Indian Rupee.
- Vostro Account refers to a foreign bank's account held in a domestic bank in the local currency.
- E.g., if a US bank (Citibank) holds an account in an Indian bank (SBI) in INR, it is SBI's Vostro account.
- On the other hand, Nostro Account refers to a domestic bank's account held in a foreign bank in the currency of the overseas country.
Internationalization of currency
It refers to the process by which a country’s national currency is used beyond its borders for international trade, finance, and as a reserve currency.
Benefits of Internationalization of Currency
- Reduces Requirement of Forex Reserves: In convertible currencies to manage external vulnerabilities.
- Enhanced Financial Market Development: Broadens and deepens domestic financial markets through availability of more financial instruments.
- Economic Autonomy: Governments can finance deficits by issuing debt in their own currency internationally instead of foreign currency debt.
- Reduced Exchange Rate Risk: Exporters and importers can invoice and transact in their own currency, reducing vulnerability to currency fluctuations.
Other Steps taken for Internationalization of Rupee
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