Revised Vostro Account Rules for Non-Resident Exchange Houses
Current · Source: Reserve Bank of India · RBI/2009-10/234 · issued 27 Nov 2009 · ~1 min read
Quick answerRBI eases compliance for AD Category-I banks on Rupee Drawing Arrangements: registration of agreements is now optional, and collateral for exchange houses under 3 years drops from one month to 7 days' projected drawings.
The rule, in the simplest words
AD Category-I banks can now choose whether to register agreements with non-resident exchange houses.
Non-resident exchange houses operating less than 3 years only need to provide 7 days' collateral for Rupee Drawing Arrangements.
Banks must still have comprehensive legal documentation in place, even if registration is optional.
How it plays out — a real example
Rahul is working with a new non-resident exchange house that wants to set up a Rupee Drawing Arrangement. He decides to register the agreement, but also reduces the collateral requirements to 7 days' projected drawings, as per the revised RBI instructions. This allows the exchange house to free up capital and encourages more cross-border remittance partnerships.
What changed
RBI revised the Memorandum of Instructions for Rupee/Foreign Currency Vostro Accounts of non-resident exchange houses, making agreement registration optional instead of mandatory. Collateral cover for exchange houses operating less than three years was reduced from one month's projected drawings to 7 days' projected drawings.
What it means for you
Banks now have more flexibility in structuring Rupee Drawing Arrangements without mandatory registration, reducing paperwork and legal costs. Lower collateral requirements free up capital for both banks and exchange houses, potentially encouraging more cross-border remittance partnerships.
What you must do
Update internal policies to reflect optional agreement registration for exchange house arrangements.
Adjust collateral requirements for exchange houses under 3 years to 7 days' projected drawings.
Ensure comprehensive legal documentation remains in place even if registration is optional.
Review existing agreements and collateral arrangements to align with revised instructions.
Who it affects
AD Category-I banks handling Rupee Drawing Arrangements, Non-resident exchange houses with Vostro accounts, Compliance and legal teams managing cross-border remittance partnerships
❓ Common questions
Is registration of the agreement with exchange houses still mandatory?
No, registration is now optional. However, comprehensive legal documentation and all necessary legal requirements must still be fulfilled.
What is the new collateral requirement for exchange houses under 3 years?
Collateral cover has been reduced from one month's projected drawings to 7 days' projected drawings for exchange houses that have not completed three years of operation.
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/234
A. P. (DIR Series) Circular No. 16
A. P. (FL/RL Series) Circular No. 3
November 27, 2009
To
All Authorised Dealer Category - I Banks
Madam / Sir,
Memorandum of Instructions for Opening and Maintenance of Rupee /
Foreign Currency Vostro Accounts of Non-resident Exchange Houses
Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to the Memorandum of Instructions for Opening and Maintenance of Rupee / Foreign Currency Vostro Accounts of Non-resident Exchange Houses, issued vide A.P.(DIR Series) Circular No. 28 [A.P. (FL/RL Series) Circular No. 02] dated February 6, 2008 and A.P.(DIR Series) Circular No. 11 [A.P. (FL/RL Series) Circular No. 01] dated August 22, 2008. In view of the difficulties expressed by AD Category-I banks having Rupee Drawing Arrangements in adhering to some of the extant guidelines, it has been decided to revise certain instructions contained in the Memorandum. The revised instructions are given in the Annex .
2. All the other instructions shall remain unchanged.
3. AD Category-I banks may bring the contents of this circular to the notice of their constituents concerned.
4. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange management Act, 1999 (42 of 1999) and without prejudice to permissions/ approvals, if any, required under any other law.
Yours faithfully,
(Salim Gangadharan)
Chief General Manager-in-Charge
Annex
[Annex to A. P. (DIR Series) Circular No.16
dated November 27, 2009]
Paragraph No. [cf. A.P.(DIR Series) Circular No. 28 [A.P. (FL/RL Series) Circular No. 02] dated February 6, 2008
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/234 · issued 27 Nov 2009. The plain-English explanation above is BankPulse’s own independent summary.
Adjust collateral requirements for exchange houses under 3 years to 7 days' projected drawings.
Review existing agreements and collateral arrangements to align with revised instructions.
📜 Compliance
Update internal policies to reflect optional agreement registration for exchange house arrangements.
Ensure comprehensive legal documentation remains in place even if registration is optional.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (AD Category-I banks handling Rupee Drawing Arrangements, Non-resident exchange houses with Vostro accounts, Compliance and legal teams managing cross-border remittance partnerships), your first concrete step on “Revised Vostro Account Rules for Non-Resident Exchange Houses” is: “Update internal policies to reflect optional agreement registration for exchange house arrangements.” (RBI issued this 27 Nov 2009).
Action required: Update internal policies to reflect optional agreement registration for exchange house arrangements.
Action required: Adjust collateral requirements for exchange houses under 3 years to 7 days' projected drawings.
Action required: Ensure comprehensive legal documentation remains in place even if registration is optional.
Action required: Review existing agreements and collateral arrangements to align with revised instructions.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5382&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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