RBI Permits Investment of Rupee Balances from Special Vostro Accounts in G-Secs and T-Bills

As per the news reports, the Reserve Bank of India (RBI) has authorised persons resident outside India who maintain Special Rupee Vostro Accounts (SRVAs) to invest their surplus rupee balances in central government securities, including treasury bills. This decision updates the RBI’s Master Direction on Non-resident Investment in Debt Instruments to reflect operational guidelines for the new measure. 

SRVAs, introduced in July 2022, are maintained by foreign banks with Indian banks to facilitate international trade settlements in Indian rupees, aimed at promoting the INR as a global trade settlement currency.

Operational Guidelines and Legal Basis

As per the RBI’s latest directions, foreign entities holding SRVAs can now channel unused rupee balances from trade settlements into short-term and long-term central government securities. 

As per the news reports, the RBI stated, "Persons resident outside India that maintain a Special Rupee Vostro Account (SRVA) for international trade settlement in Indian Rupees in terms of A.P. (DIR Series) Circular No. 10 dated July 11, 2022, may invest their rupee surplus balance in the aforesaid account in Central Government securities". 

These provisions, issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999, are effective immediately. Authorised Dealer Category-I (AD Cat-I) banks have been instructed to notify relevant customers and stakeholders.

Implications and Benefits

Given their sovereign guarantee, central government securities are regarded as among the safest investment avenues in India. This move allows non-resident SRVA holders to deploy surplus trade settlement funds into secure, risk-free instruments, enabling them to earn returns while supporting the government’s borrowing programme. 

The revised Reserve Bank of India (Non-resident Investment in Debt Instruments) Directions, 2025, originally issued on 7 January 2025, has now been updated to include these guidelines.

Read More: RBI Guidelines Ensure Multilingual Communication And Faster Grievance Redressal By Banks!

Conclusion 

This RBI move enables non-resident SRVA holders to earn secure returns on surplus rupee funds while aiding India’s borrowing programme and promoting INR trade use.

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