The Finance Ministry has called a meeting of CEOs of banks, including top six private sector lenders, on December 5 to discuss ways to promote cross-border trade in the rupee instead of the U.S. dollar.
Besides, sources said the meeting to be attended by other stakeholders, including senior officials of external affairs and commerce ministries, will review the progress made on this front so far.
Financial Services Secretary Vivek Joshi will be chairing the meeting and is also likely to see attendance from representatives of the Reserve Bank of India and Indian Banks' Association (IBA), sources said.
Following detailed guidelines from the Reserve Bank of India (RBI) on cross-border trade transactions in domestic currency in July, about nine special vostro accounts have been opened with two Indian banks to facilitate overseas trade in the rupee.
Sberbank and VTB Bank — the largest and second-largest banks of Russia, respectively — are the first foreign lenders to receive the approval after the RBI announced the guidelines.
RBI as per the guidelines decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in INR.
Another Russian bank Gazprom, which does not have its bank in India, has also opened this account with Kolkata-based UCO Bank.
The move to open the special vostro account clears the deck for settlement of payments in the rupee for trade between India and Russia, enabling cross-border trade in the Indian currency, which the RBI is keen to promote.
The RBI has allowed the special vostro accounts to invest the surplus balance in Indian government securities to help popularise the new arrangement.
UCO Bank already has a vostro account-based facility in Iran. Gazprombank, or GPB, is a privately-owned Russian lender and the third-largest bank in the country by assets.
"Indian importers undertaking imports through this mechanism shall make payment in INR, which shall be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller/supplier," RBI had said earlier.