With India-Russia trade having increased by more than a third in 2022, and payments for Russian oil in Chinese yuan having begun, the BRICS information portal (http://infobrics.org/) printed a story from Press Trust of India (PTI) reporting Feb. 22 that Russian and Indian banks have finally established the “nostro/vostro accounts” for trade settled in the rupee. India is also extending rupee trade settlement to a number of other countries. The banks include (in India) HDFC Bank and UCO Bank and about 20 others, under supervision of the government trade agency and Reserve Bank of India (RBI).
Commerce Secretary Sunil Barthwal is quoted: “Initially, we were focusing on Russia because they were facing sanctions, but now we have been in talks with several other countries. We have discussions with some of the African and Gulf countries. They are also interested.”
On the Russian side, Sberbank and VTB Bank have had their “vostro” accounts approved by the RBI. This simply means the Russian banks having reserve accounts in rubles in the Indian banks, which are not under U.S. or EU sanctions. The Indian banks, in turn, have reserve deposits of rupee in the Russian banks. In each case, the deposits in those private banks—which pay out the other country’s currency to settle payments for trade goods—are actually loaned to them by their central bank. The rupee held at Sberbank and VTB Bank are used to pay for Indian exports to Russia, and vice versa. This “enables cross-border trade in the Indian currency, which the RBI is keen to promote.”
