# Diplomatic Dispatch

By [DYLIT Chronicles](https://dylit.info/user/dylitmediabuzz)

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Rupee-Ruble Trade in Practice: How India-Russia Settlement Works Under Sanctions Pressure What "local currency trade" means here In this corridor it means invoicing and settling in rupees or rubles instead of dollars or euros. It took shape after 2022, when sanctions cut major Russian banks off from SWIFT. The RBI's July 2022 framework lets Indian banks hold Special Rupee Vostro Accounts (SRVAs) for foreign correspondents. Sberbank's India head says about 96% of bilateral trade now runs through rupee-ruble channels, though that's a company claim and some payments still move in dirhams or yuan. How a typical transaction works The contract names a currency, usually INR. The Indian importer pays rupees into the SRVA that an Indian bank keeps for a Russian bank (a vostro for the Indian bank, a nostro for the Russian one). Indian exporters are paid from the same balances. With no deep INR-RUB market, conversion has often gone through a third currency, which adds spreads. Paperwork includes the invoice, bill of lading and often a letter of credit under UCP rules, plus extra KYC and sanctions screening. Settlement, repatriation and frictions India buys far more than it sells (roughly $61 billion of imports against $4 billion of exports in FY2022-23), so rupees pile up in Russian accounts. The rupee is only partly convertible and has few uses abroad. The RBI now lets surplus balances be invested in Indian securities and, since October 2025, corporate bonds and commercial paper. Other frictions include price-cap evidence for oil cargoes, name screening, and Indian banks declining payments they see as risky. Sanctions exposure Rupee settlement doesn't remove US or EU reach, since banks, insurers and shippers rely on dollar clearing and Western services. US sanctions on Rosneft and Lukoil in October 2025 raised secondary-sanctions risk for banks dealing with them, and the EU has sanctioned an Indian refinery. The Lindsey O. Graham Sanctioning Russia and Iran Act, signed on September 18, 2026, targets Russian banks and shadow-fleet tankers. It also lets the president impose tariffs of up to 100% on the five largest buyers of Russian oil and gas. Those tariffs aren't automatic, and waivers exist. What it means for traders Expect longer onboarding, more compliance checks and higher all-in costs from spreads, fees, freight and insurance. Common controls include sanctions clauses, screening of counterparties, vessels and insurers, price-cap documentation, using banks that already run SRVAs, and balancing flows to limit idle rupees. This is general information and isn't legal advice. Key takeaways: Rupee-ruble settlement gives the corridor a workable payment path, but liquidity limits and sanctions screening still shape cost and speed. With the new US law in force, bank and shipping compliance is the main variable to watch. Sources PIB (Government of India), "RBI allowed invoicing and payments for international trade in Indian Rupee": https://www.pib.gov.in/Pressreleaseshare.aspx?PRID=1847554 The Diplomat, "End of the Road for India and Russia's Rupee-Ruble Trade?" (May 2023, so it predates later RBI changes): https://thediplomat.com/2023/05/end-of-the-road-for-india-and-russias-rupee-ruble-trade/ YouTube videos "India & Russia Find a New Way Around the Petrodollar! How Does It Work?" (August 2026, channel name not shown in my search results): https://www.youtube.com/watch?v=D7VSwh4xy6A "India-Russia's Secret to Bypassing the Dollar | VOSTRO Accounts | Vajiram and Ravi" (Vajiram and Ravi, a short explainer on vostro accounts): https://www.youtube.com/shorts/Yp88iwSRvgA