Amid reports of problems in rupee payment mechanism, particularly with reference to certain countries, such as Russia, UCO Bank said it has registered 18-19 transactions under the rupee vostro account so far. Though the value of transactions is small at present, it is likely to gain traction moving forward, said Soma Shankara Prasad, MD & CEO, UCO Bank.

UCO Bank has received interest from around 10-12 banks in Russia and Africa for opening rupee vostro accounts, and it has conducted the necessary due diligence and written to the Reserve Bank of India seeking their permission. The bank currently has a special rupee account with Russia’s Gazprombank.

“We have done around 18-19 transactions but these are not very large ticket size. Each transaction is around ₹25 lakh to ₹1 crore. People must be testing the mechanism before scaling it up. Once it is tested and people are comfortable, they will scale it up,” Prasad told businessline.

The bank is hopeful that it will receive RBI permission to open special rupee vostro accounts with some of these banks in the next 7-10 days.

Also read: UCO Bank Q4FY23 net profit up 86%

“We have already done the due diligence and written to RBI to open rupee vostro accounts. It should take about a weeks’ time for the central bank [to give their consent]. It is more of a formality unless they have anything specific with regards to a particular bank,” he said.

In order to promote exports, the Reserve Bank of India had issued a circular in July last year allowing trade settlements between India and other countries in INR with immediate effect.

Indian importers undertaking imports through this mechanism will have to make payments in INR, which would be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for trade.

At the Shanghai Cooperation Organisation’s ‘Council of Foreign Ministers’ meeting held recently in Goa, Russian Foreign Minister Sergey Lavrov had said Russia has accumulated billions of Indian rupees in trade and for it to be able to use this money, these rupees must be transferred in another currency and that was being discussed. He was responding to queries on media reports suggesting India and Russia have suspended talks to settle bilateral trade in rupees.