SDG 8: Decent Work & Economic Growth | SDG 17: Partnerships for the Goals
Institutions: Reserve Bank of India | Ministry of Finance
The Reserve Bank of India (RBI) has expanded the investment options for surplus balances in Special Rupee Vostro Accounts (SRVAs), a mechanism that enables foreign banks to hold rupee funds in India to settle international trade. Earlier (PR 61334, September 2025), RBI permitted these balances to be invested only in Government securities (G-secs, including Treasury bills).
On 3 Oct 2025, RBI issued two complementary updates. PR 61348 placed SRVAs into the broader rupee internationalisation push, meaning that India wants the rupee to be used more widely in global trade and finance. To support this, RBI announced that it would start publishing official INR reference rates against important partner currencies like the UAE Dirham and Indonesian Rupiah, so that foreign businesses have a reliable benchmark for pricing trade in rupees. It also permitted authorised dealer (AD) banks in India to provide rupee loans to neighbouring countries, giving trade partners easier access to rupee financing instead of relying solely on the US dollar.
Meanwhile, PR 61351 expanded how SRVA balances can be invested. Beyond the earlier limit of Government securities (G-secs, including Treasury bills), foreign banks can now place their rupee surpluses into Indian corporate bonds and commercial paper (CP). In practice, this means that rupees held in SRVAs are no longer restricted to ultra-safe sovereign debt - they can also be channelled into private sector instruments that may carry higher yields. This creates more incentive for foreign banks and corporates to hold rupees, while at the same time deepening India’s domestic debt markets.
For India, widening the use of SRVA surpluses strengthens efforts to make the rupee a preferred settlement currency in regional and South–South trade. By permitting investment in corporate bonds and CP, the framework enhances market depth and could increase foreign participation in India’s debt markets, while reducing reliance solely on G-secs.
What are Government Securities? → Government securities (G-secs) are debt instruments issued by the Government of India, such as bonds and Treasury bills. They are considered the safest form of investment in India because repayment is backed by the sovereign, and they have traditionally been the primary avenue for surplus SRVA balances.
What is an SRVA? → A Special Rupee Vostro Account allows foreign banks to hold rupee balances with Indian banks for settlement of international trade. Surpluses in these accounts can be deployed in approved instruments, boosting INR liquidity in cross-border transactions.
What are Indian Corporate Bonds? → Corporate bonds are debt instruments issued by companies to raise funds from investors. They pay interest over time and are riskier than Government securities, but generally offer higher returns. Allowing SRVA balances into corporate bonds opens up rupee financing for Indian firms while giving foreign holders better yields.
What is Commercial Paper (CP)? → Commercial paper is a short-term, unsecured debt instrument issued by companies to meet immediate financing needs such as working capital. CP is usually issued for periods ranging from a few days up to one year. It is considered a high-quality money market instrument and provides flexibility and quick liquidity for both issuers and investors.
Follow the full news here: RBI PR 61334 | RBI PR 61348 | RBI PR 61351
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