A foreign-currency drawing arrangement has a specific deposit floor
Section 6(h) of RBI’s exchange-house Vostro Master Direction requires a deposit of not less than USD 50,000 with the drawee AD Category-I bank, with adequacy reviewed every six months and increased if necessary on the basis of operations. The Direction is updated 1 October 2026 and checked here on 27 October 2026. This is the foreign-currency drawing arrangement rule, not the seven-day Rupee DDA collateral model. RBI exchange-house Vostro Master Direction: section 6.
Check the tie-up approval and account structure
Section 6 addresses arrangements with exchange houses already having Rupee Drawing Arrangements, with prior RBI approval for each foreign-currency tie-up. The foreign-currency arrangement is kept distinct from the Rupee arrangement, with a separate foreign-currency Vostro account. The stated drafts are drawn on A or B category branches; C category branches are excluded. A familiar counterparty does not itself prove approval for the additional arrangement. RBI exchange-house Vostro Master Direction: section 6.
Separate the minimum from the adequacy decision
USD 50,000 is the floor, not a promise that it is sufficient for every scale of operations. Record the bank’s review, exposure evidence and any higher required amount. The examples assume separately documented higher bank targets where used; they do not invent an RBI percentage of drawings or a universal additional deposit formula. The section says deposit; do not replace it automatically with a guarantee merely because a different Rupee procedure mentions guarantees. RBI exchange-house Vostro Master Direction: section 6.
Maintain funding independently of collateral
The Direction provides for credit of the aggregate foreign-currency drafts to the drawee bank’s nostro account by the stated second-working-day point and for credit of the foreign-currency Vostro account on confirmation. It also requires the accounts to be funded at all times. A maintained deposit does not automatically fund an outgoing draft or authorise overdrawing. Keep the draft, settlement-confirmation and account-entry trail linked. RBI exchange-house Vostro Master Direction: section 6.
Use a dated review and validity file
Maintain the deposit amount, currency, bank location, review date and any top-up instructions. The Direction provides for appropriate interest on the deposit and permits the stated deposits to be kept in India with the account-maintaining branch. Review any release against both the floor and the bank’s current adequacy conclusion. The arithmetic below uses USD deposits, fictional exchange rates and simple monitoring anniversaries; it is not a live exchange-rate quotation or a full settlement-calendar opinion. RBI exchange-house Vostro Master Direction: section 6.
Applicable primary references
RBI exchange-house Vostro Master Direction: section 6
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Exactly at the floor
A USD 50,000 deposit meets the stated numerical minimum. This does not establish that it is adequate for the actual operating risk; preserve the review conclusion separately.
Illustrative example 2: Identify a minimum shortfall
The deposit is USD 49,000. Against the USD 50,000 floor, the shortfall is USD 1,000. A positive account balance elsewhere does not by itself prove that the required deposit is maintained.
Illustrative example 3: A higher supported bank target
Assume a documented review concludes that deposit cover should be USD 90,000 for the arrangement. Valid deposit is USD 65,000. The review-based top-up is USD 25,000, even though the existing amount is USD 15,000 above the floor.
Illustrative example 4: Keep USD and rupee presentation separate
At a fictional ₹86 per USD, USD 50,000 is ₹43,00,000. At a fictional ₹84, the same USD deposit is ₹42,00,000. The rupee presentation changes by ₹1,00,000, while the maintained USD amount remains 50,000. Do not treat that rupee movement alone as a USD 1,000 deposit shortfall.
Illustrative example 5: Test a proposed release
Existing deposit is USD 60,000 and proposed release USD 15,000. Remaining deposit would be USD 45,000, below the floor by USD 5,000. Even a release leaving USD 50,000 would still require review against any higher applicable bank target.
Illustrative example 6: Calendar a six-month review
For monitoring, a review dated 15 April 2026 has its six-calendar-month anniversary on 15 October 2026. The interval is 183 days. A fixed 180-day shortcut points to 12 October, three days earlier. Use the actual six-month review instruction and the bank’s scheduling controls rather than substituting an invented fixed-day rule.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the foreign-currency arrangement | Separate scope from Rupee RDA |
| 2 | Verify counterparty and tie-up approval | Prior RBI approval evidence |
| 3 | Check branch and account structure | A/B branch and separate Vostro |
| 4 | Confirm maintained deposit | USD amount and bank evidence |
| 5 | Test the 50,000 floor | Minimum calculation |
| 6 | Review operational adequacy | Six-month bank conclusion |
| 7 | Calculate and complete top-ups | Higher target versus valid deposit |
| 8 | Check draft settlement funding | Nostro confirmation and Vostro entries |
| 9 | Review proposed releases | Floor and current target |
| 10 | Retain current review evidence | Dates, interest and follow-up records |
Sixteen practitioner FAQs
1. Is this the same as Rupee DDA collateral?
No. Section 6 governs the stated foreign-currency drawing arrangements.
2. What numerical deposit floor is stated?
Not less than USD 50,000 with the drawee AD Category-I bank.
3. Does the floor guarantee adequate cover?
No. The Direction requires operational adequacy review and increase if necessary.
4. How often is adequacy reviewed?
Every six months under section 6(h).
5. Is six months always 180 days?
No. Calendar-month intervals vary in days.
6. Does a Rupee arrangement automatically approve the foreign-currency tie-up?
No. Section 6 requires the stated prior approval for each tie-up.
7. Can the foreign-currency arrangement be merged with the Rupee account?
Keep the arrangements and accounts distinct as required.
8. Can a C category branch participate in the stated draft drawing?
Section 6 excludes C category branches.
9. Does a guarantee automatically replace this deposit?
Do not import another procedure’s guarantee permission into the deposit requirement.
10. Can the deposit be kept in India?
Section 6(i) permits the stated deposits with the account-maintaining branch in India.
11. Does the Direction address deposit interest?
It provides for interest at an appropriate rate.
12. Does deposit maintenance itself fund every draft?
No. Track the separate account-funding and settlement requirements.
13. When is Vostro credit linked to nostro funding?
Section 6(e) refers to receipt of confirmation of the nostro credit.
14. Are the exchange rates used here current quotes?
No. They are fictional conversion assumptions.
15. Can a rupee-value fluctuation alone change a maintained USD amount?
The accounting translation can change while the USD amount remains the same; assess the actual deposit currency and target.
16. Can excess over the minimum always be released?
Check both the statutory floor and the bank’s current adequacy requirement and applicable permissions.
Conclusion
Apply RBI’s foreign-currency drawing-arrangement deposit floor and six-month adequacy review while keeping approvals, account funding and Rupee RDA rules distinct.