Russia has finalised a multi-billion-dollar agreement to purchase a variety of military equipment and armaments from India. The deal, valued worth USD 4 billion, signalling a deepening relationship between the two nations in defence manufacturing and trade. The reports say that this amount has come from funds which were there in the Vostro accounts.
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Until October, the Russian exporters held about $8 billion in Vostro accounts. These accounts were set up for trade between Russia, and India, where the Indian rupees can be used for trading, and these accounts are managed by domestic banks on behalf of Foreign banks.
Why Russia invested in military equipment?
According to reports by Mint, there was a lack of investment opportunities in India, and the money which they held in the Vostro accounts was unspent. In six months, they had used only 50 per cent of the funds. It is difficult to say the exact amount in Vostro accounts since some transactions were complex. During the last 6-8 months, a large amount of money has been used, one of them reported.
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What is a Vostro Account?
The Reserve Bank of India came up with a solution in July 2023, for Vostro accounts which will help the country’s international trading in rupees. The RBI permitted 20 banks in the country to open 92 SRVAs of the partner banks from 22 countries and one among them was Russia. To carry forward their trade deals, the authorised Indian banks have to set up Special Vostro accounts with the trading countries’ banks. When the Indian importer wants to make a payment to a foreigner in rupees
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This Article has been written by Ms Vijaya Pramodini SK, an aspiring journalist, who is currently dedicated to her studies in Journalism and communication. With a keen eye for authenticity, she strives to uncover and present the real facts, embodying the principles of ethical journalism.
