NEW DELHI: Russian exporters taking rupee payments are reluctant to use the local currency in Vostro accounts to invest in equity and bond markets in India as the US dollar remains the most preferred currency, a finance ministry official told TNIE.
The official did say that rupee trade with Russia is taking place, but he did not give details about the quantum of transactions. “Russia has more rupee because we import from them. In August last year, the Reserve Bank of India allowed Russia to open special Vostro accounts in India through which they can invest in India’s equity and bond markets. But they are not using that facility as most countries are comfortable with dollars,” the official said.
The official said that India has also started local currency trade with Iran and UAE. However, he said that it would take many years for the rupee to be a reserve currency. As many as 18 countries have opened special rupee Vostro accounts with India for facilitating trade in local currency with India. However, commerce ministry officials have maintained that rupee trades are few and far between for several issues including lack of understanding among traders about the local currency facilities.
Recently, minister of commerce and industries Piyush Goyal told reporters that central banks of 18 countries are in talks with the RBI, and the process of operationalising rupee vostro accounts is still at different stages of finalisation. Meanwhile, the financial ministry official quoted above said that the Insolvency Bankruptcy Code (IBC) needs reforms to make the resolution faster.
He pointed out that even to admit insolvency applications against companies, the National Company Law Tribunal takes two to three years. He said that the reforms are being done by the ministry of corporate affairs (MCA) and the Department of Financial Services (DFS), Ministry of Finance, has submitted its suggestions. He also said that the government wants to expand the scope of Pradhan Mantri Suraksha Bima Yojana and PM Jeevan Jyoti Bima Yojana. “From April 1, we started a three-month campaign to increase the coverage of both the schemes,” the official stated.