SRVA (Special Rupee Vostro Account) is a bank account that an authorised dealer bank in India maintains for a foreign bank in Indian rupees. It allows trade between India and another country to be settled in Indian rupees (INR) instead of using a foreign currency such as the US dollar.
Under this arrangement, the foreign bank keeps its rupee funds in the account with the Indian bank. The system can be used for eligible export and import transactions, subject to applicable RBI rules and approvals.
How It Works:
- Indian and foreign businesses agree to settle trade in INR.
- The foreign bank opens an SRVA with an Indian authorised dealer bank.
- The Indian importer pays the Indian bank in rupees.
- The Indian bank credits the foreign bank’s SRVA.
- The foreign bank uses the rupee balance to settle eligible trade payments.
Benefits:
- Enables international trade settlement in INR
- Reduces dependence on major foreign currencies
- Can lower currency conversion costs for eligible transactions
- Supports smoother cross-border trade settlement
Example:
An Indian company imports machinery from a company in another country that uses an SRVA arrangement. Instead of making the payment in US dollars, the Indian importer pays the agreed amount in Indian rupees through its bank, while the foreign exporter’s bank receives the corresponding credit in its SRVA maintained with an Indian bank.