Russia and India Discuss Potential Investments for Surplus Rupees
Russian Foreign Minister Sergei Lavrov and Indian External Affairs Minister S. Jaishankar discussed potential investments for surplus rupees during their meeting on the sidelines of the G20 Summit in New Delhi on September 10.
Lavrov said that Russia has billions of rupees stored in Indian banks that “unfortunately cannot be used right now”. He added that India has proposed some ways in which this money can be invested.
The two countries have been discussing ways to settle their trade in rupees since the start of the Ukraine war, when Western sanctions on Russia made it difficult for Moscow to use dollars and euros. In July, the Reserve Bank of India (RBI) announced a framework for the settlement of international trade in rupees.
Under the framework, any surplus INR held in Vostro accounts can be utilized 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.
It is not clear what the specific options are that India has proposed to Russia for investing the surplus rupees. However, it is possible that these options could include investments in infrastructure projects, Indian companies, or government bonds.
The two countries are also discussing the possibility of setting up a rupee-rouble trade mechanism. This would allow them to trade directly in their own currencies, bypassing the dollar and euro.
The discussions between Russia and India on the issue of surplus rupees are ongoing. It is likely that the two countries will reach an agreement in the near future on how to utilize this money.
The two ministers also discussed other issues of mutual interest, including the situation in Afghanistan and the ongoing conflict in Ukraine.
Key Takeaways
- Russia and India are discussing potential investments for surplus rupees.
- The two countries are considering investments in infrastructure projects, Indian companies, or government bonds.
- They are also discussing the possibility of setting up a rupee-rouble trade mechanism.
- The discussions are ongoing and it is likely that an agreement will be reached in the near future.
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