Trade settlement in rupee: Banks seek clarity on fund repatriation

Banks also raised the question to the RBI as to why the surplus balances in Vostro accounts could only be invested in government securities and not corporate debt

Banks have sought clarity from the Reserve Bank of India (RBI) on whether surplus funds accumulated through international trade settlements in rupees can be repatriated to the host countries of entities involved in such transactions, central bank sources told Business Standard.

The RBI, on July 11, announced additional arrangements for invoicing, payment, and settlement of exports and imports in rupees. The exchange rate for such transactions may be market-determined, the central bank said.

According to the RBI’s notification, surplus balances in Vostro accounts emanating from such trades may be used for three purposes. These are payments for projects and investments, management of