RBI had, by way of a Notification dated July 11, 2022, under the framework for International Trade Settlement in INR, permitted Authorised Dealer Category – I Banks (‘AD Cat – I Banks’) in India to, inter alia, open Special Rupee Vostro Accounts (‘SRVAs’) of correspondent bank(s) of the partner trading country, wherein the AD Cat – I Banks may hold surplus rupee balances and facilitate settlement of trade transactions with any country, with the prior approval of the RBI. By way of a Circular dated August 5, 2025, RBI has now permitted AD Cat – I Banks to open SRVAs of overseas correspondent banks without referring to the approval of the RBI.

Further, by way of a Circular dated August 12, 2025, RBI has allowed Persons Resident Outside India (‘PROIs’) to invest the surplus rupee balances in the SVRAs in Central Government Securities (‘CGS’), including treasury bills. Accordingly, the following relevant procedural amendments have been made to the Master Direction – Reserve Bank of India (Non-Resident Investment in Debt Instruments) Directions, 2025 (‘Master Direction’):

i.    Introduction of SVRA Route: An additional route has been introduced for investment in CGS. PROIs can invest the rupee surplus balances held in SVRAs, in CGS, including treasury bills; and

ii.   Security-Wise Limit: The investment made by a Foreign Portfolio Investor (‘FPI’) and the investments made through SVRAs, in aggregate in any CGS should not exceed 30% of the outstanding stock of the security. Prior to the amendment, this limit only applied to investments made by FPIs.