The Rupee Vostro Account system is a financial arrangement that enables to conduct transactions in Indian rupees with domestic banks. The term vostro is derived from the Latin phrase in nostro vostro, which translates to in our account, in your account. In this context, the domestic bank is referred to as the vostro bank, and the foreign bank is the nostro bank.
The Reserve Bank Of India (RBI) regulates the Rupee Vostro Account system, which allows foreign banks to maintain accounts with domestic banks to facilitate trade and Investment activities in India. The system provides a secure and transparent mechanism for foreign banks to conduct transactions in Indian rupees without having to set up a local branch in India.