In the coming days, the Reserve Bank of India is expected to publish guidance for financial institutions aimed at smoothing challenges in rupee trade transactions. Reuters notes a communication from a senior official within India’s trade ministry, indicating that a formal framework is under consideration to address friction points in rupee-based settlements. The official emphasized that the rupee is increasingly used in barter-like arrangements, which complicates its deployment in broader international commerce. Specific details of the guidance were not disclosed.
The move comes amid growing use of local currency settlements in response to shifting payment dynamics, especially as India expands oil purchases with Russia. With dollar payments proving problematic for some counterparties, agreements have leaned toward bilateral settlement in rupees and other regional currencies. Russian participants, however, encounter a constraint: Indian banks are unable to fully convert or repatriate proceeds from these rupee-denominated transactions, limiting the practical flow of funds.
In early June, Bloomberg highlighted a pronounced imbalance in bilateral trade between Russia and India. Moscow exports significantly more to New Delhi than it imports, creating a persistent trade gap. As a result of currency controls and domestic market restrictions, Russia accumulates rubles and related proceeds from its oil sales, with about a billion rupees per month effectively blocked from outward movement due to these financial frictions.
There is also historical guidance from senior Russian financial authorities that settlements could be diversified to include rupees, the UAE dirham, and the Saudi rial. This approach reflects a broader strategy to reduce reliance on the dollar in sensitive energy trade and to increase monetary resilience in the face of sanctions risk and currency controls. Analysts observe that any shift toward multi-currency settlement requires careful calibration of liquidity, banking capabilities, and regulatory alignment to ensure that flows remain stable, compliant, and auditable across both Indian and Russian financial systems.