On 12-8-2025, the Reserve Bank of India (‘RBI’) notified ‘Investment in Government Securities by Persons Resident Outside India through Special Rupee Vostro account’. The notification permits persons resident outside India, who maintain Special Rupee Vostro Accounts (‘SRVAs’) for international trade settlement in Indian Rupees, to invest their surplus rupee balances in Central Government Securities, including Treasury Bills. This regulatory development marks a significant step in expanding the scope of rupee-denominated cross-border financial transactions, effective from 12-8-2025.
Key points:
- The Directions have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (FEMA), with specific references to:
- Foreign Exchange Management (Debt Instruments) Regulations, 2019 (Schedule 1),
- Foreign Exchange Management (Deposit) Regulations, 2016, and
- Master Direction— RBI (Non-resident Investment in Debt Instruments) Directions, 2025.
- RBI’s permission builds upon the framework introduced through A.P. (DIR Series) Circular No. 10 (11-07-2022), which allowed the opening of SRVAs for INR-based trade settlement.
- With the latest update, the RBI has now enabled the holders of these accounts, who are persons resident outside India, to deploy their surplus rupee balances into sovereign debt instruments. This move is operationalized through updates to the RBI (Non-resident Investment in Debt Instruments) Directions, 2025, originally issued on 07-1-2025, which now incorporates the necessary instructions for implementation.
- The RBI has directed all Authorised Dealer Category-I banks to bring the contents of this circular to the attention of their constituents and customers concerned, ensuring that the operational and compliance aspects are duly addressed.
- Through this regulatory update, the RBI reinforces its role as a facilitator of cross-border financial integration while maintaining robust oversight under FEMA.
- By allowing investment of surplus rupee balances in government securities, the central bank not only provides a secure investment avenue for non-residents but also strengthens the infrastructure for INR-based trade settlements.
