Russia used up most of its rupee balance in Indian banks: Indian officials

Contact Counsellor

Last Updated24/02/2024

Russia has used up most of its rupee balance, that had piled up in special vostro accounts of Indian banks on account of payments made largely for Russian defense purchases

The rupee balance has been used up by Russia through multiple avenues including payments for Indian imports
- Which increased about 39% to $4.05 billion in CY23
- Investments in infrastructure projects
- Investments in the equity market
- Purchase of government securities

“The two countries are exploring projects where Moscow can invest, which could be on the lines of the India-Russia joint venture Vande Bharat deal
- To manufacture and maintain 120 trains for the Indian Railways.
- The area of heavy engineering holds a lot of scope,
The Russian media has also written about a deal per which the Goa shipyards in India will build 24 cargo ships for operation in the Caspian Sea with the participation of the Russian Export Center by 2027.
Such deals between Russia and India could ensure continued usage of rupee balances by Russia
India and Russia put in place a rupee payment system to circumvent the sanctions.
Under the mechanism, a number of Russian banks, opened their rupee vostro accounts with authorized dealer banks in India
- Such as UCO, HDFC and ICICI, for enabling rupee trade between the two countries.
As India’s exports were insignificant compared to the imports, the piling up of unused rupee payments in the banks became a problem.
Russia even considered suspending some of its defense sales to India at one point of time