Amid reports of problems in the rupee payment mechanism, particularly with reference to certain countries, such as Russia, UCO Bank said it has recorded 18-19 transactions in the vostro rupee account so far. Although the value of the transactions is small at present, it is likely to gain momentum in the future, said Soma Shankara Prasad, MD and CEO of UCO Bank.
UCO Bank has received interest from around 10-12 banks in Russia and Africa to open vostro rupee accounts, and has carried out the necessary due diligence and has written to the Reserve Bank of India requesting their permission. The bank currently has a special rupee account with Russia’s Gazprombank.
“We have done about 18-19 transactions, but these are not very large ticket sizes. Each transaction is around ₹25 lakh to ₹1 crore. People should be testing the mechanism before scaling it. Once it’s tested and people feel comfortable, they’ll scale it up,” Prasad said. Line of business.
The bank is hoping to receive permission from the RBI to open special vostro rupee accounts with some of these banks in the next 7-10 days.
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“We have already done due diligence and wrote to RBI to open vostro rupee accounts. It should take about a week for the central bank to [to give their consent]. It’s more of a formality unless they have something specific regarding a particular bank,” he said.
In order to promote exports, the Reserve Bank of India issued a circular in July last year allowing trade deals between India and other countries in INR with immediate effect.
Indian importers importing through this mechanism will be required to make payments in INR, which will be credited to the vostro special account of the partner country’s correspondent bank, against commercial invoices.
At the Shanghai Cooperation Organization ‘Council of Foreign Ministers’ meeting held recently in Goa, Russian Foreign Minister Sergey Lavrov said that Russia has accumulated billions of Indian rupees in trade and in order for you to use this money these rupees need to be transferred in another currency and that was being discussed. He was responding to inquiries about media reports suggesting that India and Russia had suspended talks to establish bilateral rupee trade.