A Vostro account is a banking concept, specifically an account that a domestic bank holds for a foreign bank in the domestic bank's currency. The term "Vostro" is Latin for "yours," signifying that the account is "your account with us" from the perspective of the Indian bank. In India, this account is denominated in Indian Rupees (INR).
The concept gained significant traction in India with the introduction of the Special Rupee Vostro Accounts (SRVAs) mechanism by the Reserve Bank of India (RBI) on July 11, 2022. This mechanism was created to put in place an additional arrangement for invoicing, payment, and settlement of exports and imports in INR. The primary problem it solved was reducing India's reliance on hard currencies like the US Dollar for international trade, especially with countries facing sanctions, such as Russia, or those with foreign exchange shortages.
The mechanism works by permitting an Authorised Dealer (AD) Category-I bank in India to open an SRVA for a correspondent bank of a partner trading country. For an Indian importer, payment for goods or services is made in INR and credited into the foreign bank's SRVA. Conversely, an Indian exporter receives their export proceeds in INR from the balance held in that designated SRVA. This allows trade to be denominated and invoiced in INR, with the exchange rate being market-determined. The SRVA mechanism is regulated by the RBI under the Foreign Exchange Management Act (FEMA), 1999.
The SRVA mechanism connects directly to the broader concept of the internationalisation of the Indian Rupee, as it promotes the use of the INR in global trade. It also works in tandem with the Nostro account concept, where a Nostro account ("ours") is the Indian bank's foreign currency account held with a foreign bank, while the Vostro account ("yours") is the foreign bank's INR account held with the Indian bank.
The framework has been recently amended and consolidated: the RBI issued a circular on July 17, 2026, which superseded earlier instructions issued between July 2022 and October 2025, bringing the provisions into a consolidated framework. A key change was the removal of the requirement for AD banks to seek prior RBI approval to open SRVAs for overseas correspondent banks. Furthermore, non-resident entities holding SRVAs are now permitted to invest their surplus INR balances in Central Government Securities, including Treasury Bills. The core framework of using SRVAs for rupee-denominated settlement of cross-border trade remains the same.