Non-DDA has its own collateral wording
RBI's exchange-house Vostro Master Direction, updated on 1 October 2026 and checked on 28 October 2026, distinguishes Non-DDA from DDA and Speed procedures. Paragraph 5(B)(c) describes seven-day projected drawings for exchange houses below three years, the position after three successful years, a ten-day Non-DDA measure and an additional fifteen-day measure for the stated inspection restriction. Its permissive wording must not be rewritten as one universal mandatory number. RBI exchange-house Vostro Master Direction: paragraphs 5(B), 3 and 7.
Confirm the arrangement before choosing a projection
Under paragraph 5(B), the Non-DDA procedure is an alternative to the DDA account and auditor arrangements. It describes funding the rupee Vostro against USD for drafts issued at periodic intervals and weekly statements of drawings and funding. Do not mix those operational records with a foreign-currency drawing arrangement's distinct deposit rules. The examples concern rupee Non-DDA collateral and use fictional bank-approved projection assumptions. RBI exchange-house Vostro Master Direction: paragraphs 5(B), 3 and 7.
Preserve each condition and the bank's decision
For exchange houses not completing three years, the direction says seven-day projected-drawing cover may be obtained. After three successful years it says no collateral is prescribed, while separately stating that under Non-DDA ten-day projected-drawing collateral may be obtained. Record the actual bank decision and risk basis; do not infer that three successful years forbids the bank from taking collateral or that every Non-DDA case has a compulsory ten-day minimum. RBI exchange-house Vostro Master Direction: paragraphs 5(B), 3 and 7.
Inspection restrictions require a separate analysis
Where the bank's right to depute its own staff to examine the exchange house's books is restricted, the direction provides that additional cover equivalent to fifteen days' estimated drawings may be obtained. Establish the actual restriction and the bank's chosen additional cover. The models that combine ten and fifteen days expressly assume the bank selected both measures; they do not announce an automatic statutory twenty-five-day minimum for every arrangement. RBI exchange-house Vostro Master Direction: paragraphs 5(B), 3 and 7.
Measure actual eligible collateral and pipeline exposure
The direction identifies a convertible-foreign-currency cash deposit or an internationally reputable bank's guarantee, and calls for periodic review and monitoring so cover adequately covers drawings and accounts for evaluated pipeline debits. Verify the actual instrument, beneficiary, amount, currency, validity and enforceability. Daily-average multiplication in examples is an explicit forecasting model, not an RBI-prescribed statistical method. Do not add pipeline debits twice if the approved projection already includes them. RBI exchange-house Vostro Master Direction: paragraphs 5(B), 3 and 7.
Collateral is not payment-account funding
Keep the collateral register separate from confirmed Vostro credits and beneficiary-payment controls. A guarantee does not create a usable cash balance. The direction states that the deposit is in the AD bank's name with market-related interest payable to the exchange house; this does not imply interest on the rupee Vostro itself. Record periodic changes in volume, inspection access and pipeline exposure and obtain the bank's documented review rather than letting an old guarantee amount stand indefinitely. RBI exchange-house Vostro Master Direction: paragraphs 5(B), 3 and 7.
Applicable primary references
RBI exchange-house Vostro Master Direction: paragraphs 5(B), 3 and 7
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Seven-day model
Assume a below-three-year Non-DDA case and the bank selects seven-day cover. At an explicitly adopted projected ₹10,00,000 per day, cover is ₹70,00,000. This is an assumed approved forecast, not a universal RBI daily-average formula.
Illustrative example 2: Ten-day decision
Assume the bank selects the Non-DDA ten-day measure with projected ₹12,00,000 per day. Cover is ₹1,20,00,000. A three-successful-year history is not represented as prohibiting this risk decision.
Illustrative example 3: Additional inspection-risk cover
Assume an established inspection restriction and a bank decision to take fifteen additional days at estimated ₹8,00,000 per day. The additional model cover is ₹1,20,00,000; identify what base cover it supplements.
Illustrative example 4: Explicit combined policy
Assume the bank selects ten-day base plus fifteen-day additional cover on the same ₹10,00,000 daily projection. The model is ₹1,00,00,000 plus ₹1,50,00,000, total ₹2,50,00,000. This is the stated policy case, not an automatic legal minimum for all Non-DDA accounts.
Illustrative example 5: Cover shortfall
Against a documented selected requirement ₹2,50,00,000, assume eligible enforceable collateral of only ₹1,80,00,000. Shortfall is ₹70,00,000. Unverified expired instruments cannot be added merely to make the spreadsheet balance.
Illustrative example 6: Avoid pipeline duplication
Assume the approved ₹1,00,00,000 drawing forecast already contains ₹30,00,000 of evaluated pipeline debits. Adding those same debits again would show ₹1,30,00,000 and overstate that model by ₹30,00,000. If the approved forecast excludes the pipeline, assess it separately instead.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the route | Rupee Non-DDA tie-up documents |
| 2 | Verify operating history | Below three years or three successful years |
| 3 | Read the current collateral clause | Paragraph 5(B)(c) |
| 4 | Confirm inspection access | Actual legal and operational restrictions |
| 5 | Record bank discretion | Selected base and additional measures |
| 6 | Approve the forecast | Drawing population, horizon and modelling basis |
| 7 | Evaluate pipeline debits | Inclusion without double counting |
| 8 | Validate collateral instruments | Currency, issuer, beneficiary, amount and validity |
| 9 | Separate funding controls | Confirmed Vostro credits and beneficiary-payment evidence |
| 10 | Review periodically | Volume changes, instrument renewal and documented bank decision |
Sixteen practitioner FAQs
1. Which arrangement does this guide cover?
Rupee Non-DDA arrangements under paragraph 5(B).
2. Is it the DDA collateral calculation?
No. Identify the separate procedure and wording.
3. What drawing statements does Non-DDA describe?
Weekly drawing and funding statements under paragraph 5(B)(b).
4. What measure is mentioned below three years?
Seven days' projected drawings, using the direction's permissive wording.
5. What history matters for the later statement?
Three years of successful operations.
6. Does that history prohibit collateral?
No. Read the separate Non-DDA risk-cover wording and bank decision.
7. What separate base measure is mentioned for Non-DDA?
Ten days' projected drawings may be obtained.
8. When is the additional fifteen-day measure discussed?
Where the stated restriction on staff examination of books exists.
9. Is twenty-five days mandatory for every case?
No. The combined illustration expressly assumes the bank selected both measures.
10. Is multiplying a daily average an RBI-mandated forecast model?
No. It is an explicit illustrative forecasting assumption.
11. Which collateral forms are described?
The specified convertible-currency cash deposit or internationally reputable bank guarantee.
12. Can an expired guarantee automatically count?
Verify eligibility, validity and enforceability before counting it.
13. Why examine pipeline debits?
The direction requires cover review to account for evaluated pipeline debits.
14. Should pipeline amounts always be added again?
No. Determine whether the projection already includes them.
15. Does collateral itself fund beneficiary payments?
No. Confirm actual payment-account funding separately.
16. What should periodic review record?
Current drawings, pipeline, inspection access, selected cover and valid instruments.
Conclusion
Document the bank’s Non-DDA collateral decision using the actual drawing projections, inspection constraints and pipeline debits without inventing a universal fixed minimum.