India assures banks it’s ready to manage outflow of Russian funds: report
Russian companies have accumulated billions of rupees in local banks.
India’s central bank has reportedly assured banks that it can and will step in to manage market impacts arising from outflows of Russian funds held in rupees with local banks, sources told Reuters.
Russian companies have accumulated billions of rupees in India, which are held in special accounts by the local banks. This arose amidst Western sanctions that restricted Russia’s use of the U.S. dollar for trade, which had pushed India to be paid in other currencies.
The Reserve Bank of India (RBI) has allowed these locally held money to be investment in local government bonds until repatriated.
Bankers are now worried about the eventual outflows of these funds, but RBI officials have reportedly assured them in informal meetings that they have adequate buffers to manage such an eventuality, the banking sources said.
"Whenever banks have expressed concerns about potential outflows on the forex and debt market, the RBI has always responded positively," a treasury official at a state-run bank said.
Here’s more from Reuters.