Indian Bank, which has had a long presence in Sri Lanka, has received the regulatory go ahead to hold special rupee vostro accounts of three banks from the South Asian island nation which is struggling to tide over a serious foreign exchange crunch.
The INR vostro facility is part of a special trade settlement mechanism which was finalized by the Reserve Bank of India (RBI) in July 2022. The arrangement allows Indian importers to deposit rupees in vostro accounts that overseas banks open with banks in India and clearing of dues to Indian exporters from the surplus balances in the vostro accounts.
The Chennai-headquartered public sector bank is expected to activate the special accounts in about a week.