Russian exporters stuck with $8 bn in local Vostro accounts

Russian exporters, including state-backed entities, are likely holding about $8 billion currently in Vostro accounts set up to facilitate trade in Indian rupees, two people familiar with the developments said.

- Ravi Dutta Mishra & Rhik Kundu

Some of the Russian money is invested in Indian securities, but most of it remains in Vostro accounts due to a lack of investment opportunities in India for Russians and continued volatility in exchange rates.

"It is difficult to say the exact amount in the Vostro accounts since some transactions are very complex. However, the figure is likely closer to $7-8 billion than $30-40 billion," said the first person cited above, who didn't want to be named.

A Vostro account is a bank account held by a domestic bank on behalf of a foreign bank.

The foreign bank can use its Vostro account to conduct transactions, including forex settlements, cross-border payments and investments in the domestic market.

So far, Russian funds (in rupee) have been invested in Indian government treasury bills, since such funds are not allowed to be invested in corporate debt according to regulations.

Mint reported on 9 August that Russian funds worth about $10-12 billion are estimated to have been invested in Indian government treasury bills in the year ended 31 March 2023, after a surge in trade deficit led to higher surpluses in the Vostro accounts.