Twenty is a governance review point, not automatic expansion permission
Paragraph 2 of RBI's Master Direction on exchange-house vostro accounts describes the RDA onboarding route. First entry into the specified arrangements requires an application to the relevant RBI Regional Office with prescribed documents. Subsequent RDAs are subject to the guidelines and immediate RBI intimation. Once the total number reaches twenty, the direction says the bank may cause a detailed external audit of its internal system. Based on a satisfactory report, the specified governance authority may authorise additional arrangements. Do not convert this wording into an unconditional right to add the twenty-first arrangement. RBI Master Direction on exchange-house vostro accounts, paragraphs 2 and 6, October 2026.
Use the current delegated-authority wording
The direction updated on 1 October 2026 permits authorisation by the AD Category-I bank's Board or a committee of the Board to which the Board has delegated powers for that purpose. Keep the delegation and its scope with the proposal. A routine operational committee is insufficient unless it is a committee of the Board with the required delegated powers. The note and decision may be filed with RBI, and new arrangements are to be intimated immediately, following the direction's wording. RBI Master Direction on exchange-house vostro accounts, paragraphs 2 and 6, October 2026.
Count arrangements on an evidenced basis
Reconcile the arrangement register, approvals, commencement and closure evidence. Do not count uploaded documents as if each were an arrangement, or assume that every inactive label proves legal closure. Resolve which arrangements belong in the actual count under the applicable route before comparing with twenty. The examples assume the stated counting conclusions are supported and illustrate the register bridge, not a new definition of arrangement. RBI Master Direction on exchange-house vostro accounts, paragraphs 2 and 6, October 2026.
The audit evidence concerns the internal system
The specified detailed external audit is intended to establish satisfactory operation of the internal system. Preserve its scope, findings, corrective-action evidence and the basis for treating the report as satisfactory. A file titled audit report is not proof that the relevant system and account population were reviewed. This onboarding route is distinct from the half-yearly self-inspection, concurrent audit and other ongoing controls elsewhere in the direction. RBI Master Direction on exchange-house vostro accounts, paragraphs 2 and 6, October 2026.
Keep exchange-house due diligence in the proposal
Paragraph 2 also requires enquiries into financial standing, valid local licences and authority to transact the relevant business, comprehensive legal documentation and the normal signing-authority controls. Registration of the agreement is optional under the stated wording, but the legal-documentation requirements continue. Do not treat numerical headroom below twenty as evidence that a proposed exchange house passes the substantive conditions. RBI Master Direction on exchange-house vostro accounts, paragraphs 2 and 6, October 2026.
Limit the conclusion to the actual route
This guide explains the specified RDA audit-and-governance route without replacing the direction's permissive words with an invented mandatory deadline. Foreign-currency drawing tie-ups have their own prior-approval requirements in paragraph 6; the RDA count does not remove them. The illustrations use fictional arrangement counts and internal evidence-status categories, with no invented RBI fee or completion period. RBI Master Direction on exchange-house vostro accounts, paragraphs 2 and 6, October 2026.
Applicable primary references
RBI Master Direction on exchange-house vostro accounts, paragraphs 2 and 6, October 2026
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Reaching the review point
An evidenced register has 19 relevant RDAs and one new arrangement would bring it to 20. The proposed count reaches twenty; there is no remaining numerical gap to that point. This arithmetic does not itself approve the arrangement or decide completion of the guideline requirements.
Illustrative example 2: A proposal beyond twenty
The verified existing count is 20 and three additional arrangements are proposed. The proposed total is 23, with three additional arrangements requiring review under the relevant route. A satisfactory audit report and a competent governance decision must be assessed on the actual facts; the number 23 is not self-authorising.
Illustrative example 3: Documents are not arrangements
A data room contains 24 agreement files. Four are verified duplicate copies of four already-counted arrangements. The unique arrangement population is 20, not 24. Preserve the document-to-arrangement mapping before using the register for an expansion proposal.
Illustrative example 4: Valid closures and new proposals
The opening relevant count is 23. Evidence establishes valid closure of four arrangements, and two new arrangements are proposed. The model post-closure count is 19 and the proposed closing count 21. Merely labelling four entries dormant would not establish the same result without the closure analysis assumed here.
Illustrative example 5: Close audit findings on evidence
The detailed audit identifies eight findings. Verified actions close six, leaving two open and a 75% closure proportion. Whether the report supports the required satisfactory-system conclusion depends on the unresolved findings and audit assessment, not the percentage alone.
Illustrative example 6: Reconcile proposal-pack completeness
Five new proposal packs are reviewed. Three have complete required evidence, while two remain incomplete. The internal completeness measure is 60%, with two packs needing resolution. This is not an RBI approval percentage or permission to disregard missing licence or governance evidence.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the onboarding route | First RDA, subsequent RDA or separate foreign-currency tie-up analysis. |
| 2 | Verify the arrangement count | Approval register and arrangement identities. |
| 3 | Resolve duplicates and closures | Source-to-register mapping and legally supported status. |
| 4 | Compare the proposal with twenty | Existing, proposed and resulting counts. |
| 5 | Review the external-audit route | Scope, report and internal-system findings. |
| 6 | Resolve material audit matters | Evidence supporting the satisfactory-report conclusion. |
| 7 | Verify governance authority | Board decision or specific delegation to a committee of the Board. |
| 8 | Complete exchange-house due diligence | Financial standing, licences, business authority and legal documentation. |
| 9 | Record RBI communications | Applicable application, intimation, note and decision evidence. |
| 10 | Retain the decision trail | Approved proposal, conditions and separate ongoing-control responsibilities. |
Sixteen practitioner FAQs
1. What does paragraph 2 address?
The specified RDA onboarding and expansion framework and exchange-house conditions.
2. What is required on first entry into the specified RDAs?
Application to the concerned RBI Regional Office with prescribed documents under the direction.
3. Is the twenty-arrangement point automatic approval?
No. It does not itself authorise expansion.
4. What audit wording does the direction use?
It says the bank may cause a detailed external audit once the total reaches twenty.
5. What does the satisfactory report support?
The specified governance authority may authorise additional arrangements based on it.
6. Can an appropriately delegated committee act?
The current wording permits a committee of the Board to which the Board has delegated powers for the purpose.
7. Is any operational committee sufficient?
No. Verify that it is a committee of the Board, together with the actual delegation and scope.
8. Are document counts necessarily arrangement counts?
No. Remove verified duplicate copies through a supported mapping.
9. Does an inactive label establish closure?
Not by itself. Determine the actual supported status.
10. Does being below twenty waive due diligence?
No. Financial-standing, licence and other requirements continue.
11. Is registration of the agreement always mandatory under this wording?
The direction makes registration optional while retaining comprehensive legal-documentation requirements.
12. Does one favourable closure percentage establish a satisfactory audit?
No. Assess the findings, their significance and the report's conclusion.
13. Are the model internal deadlines or status measures RBI rules?
No numerical deadline is invented here; internal status measures support evidence management.
14. Must new arrangements be intimated to RBI?
The direction requires immediate intimation as stated in the relevant route.
15. Does this RDA route remove foreign-currency tie-up approval?
No. Paragraph 6 has separate prior-approval conditions.
16. Does onboarding audit replace ongoing account reviews?
No. Keep self-inspection, concurrent audit and other ongoing requirements distinct.
Conclusion
Review RBI’s specified RDA expansion route at twenty arrangements, linking the count, satisfactory external-audit evidence and properly authorised governance decisions.