RBI Allows Vostro Balances Investment In Corporate Debt Instruments

The Reserve Bank of India (RBI) allowed banks holding special rupee vostro accounts to invest surplus balances in corporate debt instruments. This move is intended to deepen India’s financial markets and enhance the use of rupee settlement mechanisms, particularly with countries transacting under special trade arrangements. The policy change enables foreign entities using vostro accounts to diversify holdings beyond government securities, thus promoting investment in corporate debt and strengthening domestic bond markets. It reflects RBI’s broader strategy of internationalizing the rupee and expanding financial market depth. The measure is also expected to attract more trade partners into rupee-based settlements while supporting the corporate sector with enhanced access to capital. It signifies India’s push for global trade rebalancing through currency diversification and debt market development.