Earlier this year, Russian officials said that Moscow had accumulated billions of rupees in Indian banks that couldn’t be used. Industry estimates peg this amount at $7-8 billion. Until July 2, the RBI had approved 34 applications from different Russian banks for opening SRVAs in 14 Indian commercial lenders.
Around 90% of the transactions with Russia are through Sberbank India. An industry executive said annual trade through the SRVA route is pegged at around Rs 8,300 crore, of which 70% is exports with mostly medium and small enterprises using the facility. “There is an apprehension among Russian companies on the rupee-ruble exchange rate, especially when the money would be remitted back to Russia after being invested in government securities,” said the executive cited above. “They may find it attractive to invest in corporate bonds in that case.”
Another executive said a review with banks and financial institutions will be held later this month on the challenges of promoting bilateral payments through the SRVA mechanism. Earlier, the finance ministry had advised banks to form a working group to look into the reasons impeding the widespread adoption of the mechanism and suggest ways to make it popular. “The government is not satisfied with the progress made, and we will be soon submitting our report,” said the executive.
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