By Elena Fabrichnaya
MOSCOW (Reuters) – Russia’s top lenders Sberbank and VTB have said they are improving their ability to convert rupees into roubles, helping exporters to get funds effectively trapped in India due to Western sanctions.
After Moscow despatched troops to Ukraine in February 2022, Western countries imposed sweeping sanctions and have sought to wean themselves off Russian energy exports.
India has been a major beneficiary, picking up Russian oil on the cheap. But the rupee is not fully convertible and Russia is seeking to avoid the U.S. dollar and other currencies of what it calls “unfriendly” Western countries.
The head of Sberbank’s Indian branch, Ivan Nosov, speaking at Russia’s Eastern Economic Forum in Vladivostok on Tuesday, said he viewed his branch as a “bridge between countries in the financial sphere” that is ready to convert rupees to roubles.
VTB CEO Andrei Kostin, in comments published by the RBC daily on Monday, also said his bank, Sberbank and others were now converting rupees to roubles.
“Trade transactions are done in yuan, but there is also direct rupee-rouble conversion. We usually use intermediaries from India or the (United Arab) Emirates,” Kostin said. “Many of our clients don’t have rupees left.”
Russia-India trade turnover grew 2.6 times in 2022 to $35.3 billion, according to customs data, as Russian exports surged.
“The balance of trade that was in Russia’s favour has become even less balanced,” India’s ambassador to Moscow Pavan Kapoor said on Tuesday, pointing to increased supplies of crude oil and fertilisers.
In response, India is seeking to stimulate investment in several sectors and diversify the goods that India supplies to Russia, Kapoor said at the economic forum.
Tightening global supplies have led Russian companies to stop offering fertiliser such as di-ammonium phosphate (DAP) to India at discounted prices, three industry sources told Reuters.
On the transactions issue, Kapoor rejected reports in Russian media that rupees stuck in Russian exporters’ accounts in India were related to oil supply payments.
“This is not true,” he said. “All oil was bought with hard currency.”
But Moscow has acknowledged that some funds generally are stuck in India.
Russian Foreign Minister Sergei Lavrov last week said he had discussed the issue of payments with his Indian counterpart at a Jakarta summit.
“Very many billions of rupees, which have not yet found a use, have accumulated, and our Indian friends have assured us that they will propose promising areas where they can be invested,” Lavrov said.
(Reporting by Elena Fabrichnaya; Writing by Alexander Marrow; Editing by Gareth Jones and Emelia Sithole-Matarise)