India's ICICI Bank is adding a rupee vostro account (RVA) to its digital online trade platform that includes letter of credit (L/C) functionality according to an official statement.

The proposition will enable Indian exporters and importers to pay and settle export-import transactions in Indian rupees (INR) with RVAs that can be opened with correspondent banks in the Americas, Europe, Asia and the Gulf.

The move echoes recent moves in several countries to seek alternatives to conventional US dollar denominated trade finance and to develop structures and systems to facilitate international trade in a variety of currencies (DC World News, 24 April 2023).

Reduced currency risk

ICICI Bank's initiative falls under India's 2023 foreign trade policy and the Reserve Bank of India's framework for invoicing, payment and settlement of exports and imports in INR, in addition to US dollar, euro and other currencies.

These measures aim to reduce the foreign currency risk borne by Indian exporters and importers.

Currencies worldwide

ICICI Bank says that it has established over 100 RVAs with correspondent banks across 29 countries, including the US, Canada, UAE, Saudi Arabia, UK, Germany and Malaysia.

"This move will boost foreign trade in rupees and [the] bank is offering RVA[s] to Indian exporters and importers to settle their international trade transactions in INR. It will also help in promoting the growth of Indian global trade and increase international trade in Indian rupees," according to head of large clients group at ICICI Bank, Sumit Sanghai.

The bank's official statement says the RVA adds to ICICI's comprehensive range of digital export-import solutions that include 'trade online', the bank's flagship digital platform for cross-border transactions, and its digital e-L/C offering.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.