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About Settlement in Indian Rupees (SRVA)


India has simplified the payment mechanism for traders importing pulses from Myanmar, requiring them to use the Rupee/Kyat direct payment system through the Special Rupee Vostro Account (SRVA) through the Punjab National Bank.


GS III: Indian Economy

Dimensions of the Article:

  1. About Settlement in Indian Rupees (SRVA)
  2. Eligibility Criteria for Banks

About Settlement in Indian Rupees (SRVA)


  • SRVA is an additional arrangement to the existing system of settlement using freely convertible currencies and operates as a complementary system.
    • Freely Convertible Currency: Currency that can be converted into major reserve currencies like the U.S. Dollar, Pound Sterling, in accordance with the country’s regulations.


  • Reduces dependence on hard (freely convertible) currency.

Regulatory Approval

  • SRVA requires prior approval from the Reserve Bank of India (RBI) before opening, unlike the Rupee Vostro account.
Functioning of SRVA
  • Components
    • Invoicing: All exports and imports must be denominated and invoiced in Indian Rupees (INR).
    • Exchange Rate: The exchange rate between the trading partner countries’ currencies is market-determined.
    • Settlement: The final settlement occurs in INR.
  • Operational Process
    • Authorized domestic dealer banks (authorized to deal in foreign currencies) must open SRVA accounts for correspondent banks of the partner trading country.
    • Domestic importers make payments (in INR) into the SRVA account of the correspondent bank for invoices from overseas sellers/suppliers.
    • Domestic exporters receive export proceeds (in INR) from the balances in the designated account of the correspondent bank of the partner country.
    • For availing advances against exports, domestic banks must prioritize ensuring that available funds are used to meet existing payment obligations, i.e., from already executed export orders or pending export payments.
    • All cross-border transactions reporting must comply with the guidelines under the Foreign Exchange Management Act (FEMA), 1999.

Eligibility Criteria for Banks

  • Banks from partner countries must approach an authorized domestic dealer bank to open the SRVA.
  • The domestic bank then seeks approval from the apex banking regulator, providing details of the arrangement.
  • Domestic banks must ensure the correspondent bank is not from a country listed in the updated Financial Action Task Force (FATF) Public Statement on High-Risk and Non-Co-operative jurisdictions.
  • Domestic banks must present financial parameters related to the corresponding bank for review.
  • Authorized banks can open multiple SRV accounts for different banks from the same country.
  • Balances in the account can be repatriated in freely convertible currency and/or the currency of the beneficiary partner country, depending on the underlying transaction for which the account was credited.

-Source: The Economic Times

May 2024