International Payments with India: Payments in Rupees and Features of Banking Control

India has become one of the directions that Russian businesses seriously consider as an alternative to traditional suppliers: pharmaceuticals, textiles, tea, mechanical engineering components, IT services. But settlements with Indian counterparties are structured differently than with China or Turkey—here, the limited convertibility of the rupee plays a key role. We break down how to build a working payment scheme and what to pay attention to when preparing documents.

🇮🇳 Why settlements with India are a separate story

The Indian rupee (INR) is not a freely convertible currency in the classical sense: the Reserve Bank of India regulates capital movement, and repatriating accumulated rupees back into dollars or other currencies requires separate agreements. This creates a specificity that is absent in settlements with Turkey or the UAE—where the currency is generally freely convertible within standard banking procedures.

💱 In which currency settlements are usually conducted

The currency choice for settlements with India directly affects the speed and predictability of the payment. A universal scheme that suits any company equally well does not exist here—even more so than in other directions—the route is selected based on the specific counterparty, recipient bank, and nature of the transaction.

🏦 How banking routes are organized

In practice, there are several models for organizing settlements with India:

• Direct settlements through vostro accounts — used when the Indian bank has correspondent relationships supporting such a scheme; suitable for regular large volumes.
• Settlements through a third-country bank — the payment passes through an intermediary that has working relationships with both the Russian and Indian banks.
• Agent model — used if the direct route for a specific bank pair does not work and the transaction volume does not allow for long negotiations.

When choosing a route, it is important to consider not only the currency and amount but also how the counterparty plans to use the received funds—this determines which settlement model will be sustainable over time, not just for a one-time transaction.

📄 What documents the bank will require

Due to the specifics of Indian currency regulation, banks often request a more detailed explanation of the economic purpose of the operation than for settlements with other countries. Preparing such an explanation in advance is what reduces the risk of requests or payment delays.

⚠️ Common challenges when working with India

1. The counterparty cannot quickly repatriate the received rupees into a convertible currency—this should be discussed before the transaction, not after;
2. The correspondent bank does not support the selected rupee settlement route for a specific amount;
3. Insufficiently detailed description of goods or services, especially in pharmaceuticals and IT;
4. Discrepancy between the stated transaction amount and the amount actually passing through the vostro account.

🤝 How it is organized in ONLY

ONLY supports international settlements for legal entities and sole proprietaries, including the India direction—with consideration of rupee convertibility specifics and requirements of Indian and Russian banks to documents. We clearly state upfront if an operation cannot be conducted—for example, due to missing documents or unclear business purpose—reducing risks for both the client and the bank.

❓ Frequently asked questions