Russian companies investing rupee surplus in Indian govt bonds: Report

This practice highlights the difficulties involved in converting rupees into roubles, which has hindered efforts to expand non-dollar-based trade between Russia and India.

Sunil Mehta, the head of IBA, has become the first senior official to acknowledge that Russian funds held in Indian banks are being channelled into government securities, as it offers them the benefit of readily available liquidity.

"They have surplus of money. They have invested (in local bonds). RBI has opened the window that whatever trade surplus they have, you can invest in government bonds," Mehta was quoted as saying by Reuters.

This action follows the Reserve Bank of India's introduction of guidelines last year for settling international trade transactions in rupees. Additionally, the central bank permitted the investment of any surplus rupee balances held locally in government bonds and treasury bills.

"Initially, if you go for any investment, you will go for a shorter duration because you don't know how long this crisis will last," Mehta said, the report added.