RBI allows HDFC Bank and Canara Bank to open special Vostro rupee account for trade with Russia

Tags: Economy/Finance

Reserve Bank of India (RBI) has allowed India’s largest private sector bank HDFC Bank and the public sector bank Canara Bank to open a special "Vostro account" for trade in rupees with Russia.

Vostro is a type of a bank account where a bank holds an account on behalf of other banks in local currency. Normally here the other bank is a foreign bank.

In July 2022 RBI introduced a mechanism for international trade settlements in rupees, aiming to promote exports and facilitate imports.

This was done to promote trade and investment with Russia which was facing sanction from western countries over its invasion of Ukraine.

Russian energy major Gazprom has opened an account with UCO Bank while VTB Bank and SberBank have opened accounts with their own India-based branch offices.

HDFC Bank is the largest private sector bank in India with its headquarters in Mumbai.

Canara Bank is a Public sector bank with its headquarters in Bengaluru.