Sri Lankan banks opened special rupee trading accounts (SRVA) with Indian banks including the largest Indian Bank, State Bank of India (SBI) to conduct bilateral trade in Indian Rupees following Russia and Mauritius.
According to Indian media reports, People’s Bank of Sri Lanka opened SRVA accounts with State Bank of India (SBI), and Bank of Ceylon (BOC) opened an SRVA with its subsidiary in Chennai.
Reserve Bank of India (RBI)recently permitted banks to open five Vostro accounts for trade with Sri Lanka, which grants the use of rupees instead of USD and other major currencies in international transactions.
A Vostro account is a record of funds held by a bank or owed to a bank by a third party. India has entered into rupee trade agreements with Russia, Mauritius, and Sri Lanka through the SRVA.
SBI in the past expressed its reluctance to open rupee trading accounts for Russian entities citing the risk of sanctions from the US and other European countries
According to media reports, Union Bank of India has opened a rupee account with Ros Bank Russia and Indian Bank has opened such accounts with three Sri Lanka-based lenders like NDB Bank and Seylan Bank. Russian Bank, Gazprom has opened account at UCO Bank. UCO Bank already has a Vostro account-based facility in Iran.
Sberbank and VTB Bank, the two largest banks in Russia, respectively, are the first foreign lenders to receive the approval after the RBI announced the guidelines on overseas trade in the rupee in July.
RBI has also allowed the SRVAs to invest the surplus balance in Indian government securities.