For the fifth year in a row, Russia has been unable to use the rupees it has accumulated in India from oil exports

The Reserve Bank of India is looking for ways to utilize the billions of rupees that have accumulated in the accounts of Russian exporters and remain effectively frozen. 

Bloomberg reports on this.

The regulator is exploring options for channeling these funds into investments within the Indian economy, as the free circulation of currency outside the country is prohibited. The Reserve Bank of India is trying to act flexibly under pressure from Russian banks seeking a way out of a long-standing financial trap.

The problem arose after India sharply increased its purchases of raw materials from Russia in 2022 at a significant discount, conducting part of the settlements in the national currency. Due to the non-convertibility of the rupee, Russian companies cannot withdraw the earned funds or use them for international payments. According to preliminary estimates, the volume of frozen assets for delivered oil reached approximately $39 billion.

Currently, Indian authorities have allowed Russia to partially invest these funds in the local stock market, albeit with significant restrictions. Representatives of the Reserve Bank of India note that the Russian side is well-versed in local regulations and constantly proposes new ways to utilize the rupees. Despite this, the issue of Russia’s full access to its energy revenue remains unresolved due to regulatory barriers in Delhi.

As a reminder, other countries are dictating to Russia the terms under which they will purchase its energy resources. In particular, India intends to trade with Moscow exclusively in its national currency.

According to the Indian Ministry of Commerce, trade with Russia has increased fivefold over the past three years, as India purchases Russian crude oil, while most other countries have stopped buying it following the invasion of Ukraine.