Russia's Foreign Minister Sergei Lavrov reiterated on September 10 that Moscow has billions of rupees stored in Indian banks that "unfortunately cannot be used right now", but India has proposed some ways in which this money can be invested.
Lavrov was speaking at a briefing in New Delhi as the two-day meeting of the leaders of G20 nations under India's presidency concluded on September 10.
While India and Russia did settle their trade in rupees following the setting up of the framework, the system did not take off as hoped as Moscow soon accumulated a surplus to the tune of billions of rupees as a surge in New Delhi's oil imports led to a ballooning trade deficit.
India’s imports from Russia, the former’s second-largest import source nation, surged 132 percent in April-June to $16.04 billion primarily due to New Delhi's oil purchases from Moscow, according to the latest official figures.
Though Russia and India did not get much time to deliberate on bilateral issues during the Leaders' Summit this weekend, Lavrov said that he discussed bilateral matters with his Indian counterpart S Jaishankar on the sidelines of the ASEAN Summit earlier this week. Indonesia hosted the 43rd ASEAN Summit from September 6-7.
This is not the first time that Lavrov has mentioned Moscow's concerns over accumulating Indian rupees. Back in May, he had told reporters on the sidelines of the Shanghai Cooperation Organization (SCO) meeting in Goa that both countries are discussing ways to transfer the rupees Moscow has accumulated in another currency.
The options offered to Russia to invest accumulated rupees could possibly be those included in the framework for the settlement of international trade in rupees unveiled by the Reserve Bank of India (RBI) in July 2022.
The framework said that any surplus INR held in Vostro accounts can be utilised for permissible capital and current account transactions such as payments for projects and investments, export and import advance flow management and investment in government securities subject to limits and guidelines.
Indian lenders opened special vostro accounts at Russian banks, including Sberbank PJSC and VTB Bank PJSC to facilitate overseas trade in rupees and keep crude flowing.
A report from Reuters on August 1, citing bankers said that Russia had mostly invested its surplus rupees in short-term treasury bills rather than longer-duration government bonds. Following which, without divulging how much Russia may have invested in Indian government securities, the RBI on August 10 allayed any concerns about the possible withdrawal of Russian investment in local government debt, saying it did not expect the domestic liquidity situation or the rupee's exchange rate to come under pressure from such an outflow.