Russian exporters ramp up spending from Vostro accounts

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to below $4 billion in the last six to eight months, two people aware of the matter said. The spending from the account covered payments for Indian imports, purchase of securities, and other acquisitions, including defense equipment and armaments, the persons said said. "It is difficult to say the exact amount in the Vostro accounts since some transactions are very complex.

However, during the last 6-8 months or so, a large part of the amount has been utilized," the first person mentioned above said. A Vostro account is managed by a domestic bank on behalf of a foreign bank. The foreign lender can use its Vostro account for transactions, including forex settlements, cross-border payments and investments in the domestic market.

Last October, Mint reported that Russian exporters, including state-backed entities, were likely holding about $8 billion currently in Vostro accounts set up to facilitate trade in Indian rupees. During that time, while some of the Russian money from the Vostro account was invested in Indian securities, a large part of it remained in Vostro accounts due to a lack of investment opportunities in India for Russians and continued volatility in exchange rates. Russian funds (in rupee) have also been invested in Indian government treasury bills since regulations do not allow such funds to be invested in corporate debt.

By the end of March 2023, it was estimated that Russian investments in these securities were around $10-12 billion, after a surge in trade deficit led to a surplus in Vostro accounts. "Both New Delhi and Moscow have been working on sorting the issue (piling up of the Indian currency payment in Vostro account)," the second person said. "Indian exports are also being settled from the Russian