Sberbank’s India fund creates a rupee-Nifty corridor for Russian investors

In a move that could change the way sanctions-hit Russia deploys billions of stranded Indian rupees, state-owned Sberbank is launching a closed-end mutual fund linked to the Nifty50, essentially opening a direct route for Russian investors to invest their surplus rupees in Indian stocks.

The structure offers Moscow a solution to its currency dilemma: When Russia sells crude oil to India, it receives payments in rupees parked in special vostro accounts that cannot be freely converted into dollars due to US financial sanctions. The new product allows these unused balances to be channeled into the Indian capital markets, turning a forced rupee pool into an investment opportunity.

To start with, Russia’s Sberbank will launch a mutual fund linked to India’s Nifty50 Index, offering Russians diversified exposure to India’s largest and most liquid companies.

Gautam Kalia, head of Investment and Solutions at Mirae Asset ShareKhan, said India is encouraging Russia to reinvest the large rupee reserves built up from oil sales in productive sectors. These funds could flow into infrastructure projects such as railways and logistics, energy, defense manufacturing, pharmaceuticals, fertilizers and high-tech areas such as IT and automation, he said.

This strategy mirrors Japan’s long-standing model of infrastructure financing, creating a win-win situation: Russia deploys its captive rupee supply and India acquires capital for growth and modernization.

In August, the RBI allowed authorized dealer category-I banks to open a special rupee vostro account for their foreign correspondent banks without prior approval from the RBI. The central bank has also relaxed rules to let Russian companies invest in government bonds, debentures and bonds, easing previous restrictions.

Driven by crude oil imports, trade turnover between Russia and India has witnessed remarkable growth in recent years, increasing almost fivefold to $68 billion in FY25, up from around $13 billion in 2021. In FY25, India exported $4.9 billion to Russia but imported $64 billion, leaving a sharp trade gap of $59 billion; Crude oil alone was worth $50 billion.

Narinder Wadhwa, MD and CEO of Ski Capital Services, said that similar to the way Japan has historically financed major Indian infrastructure projects, Russia can explore long-term sectors such as energy, logistics, railways, ports and technology partnerships to productively utilize unused rupee balances.

However, he said returns from these projects in rupees are not helpful unless there is a sustainable option for repatriation or a long-term liquidity mechanism, which India has not yet clarified.

Sandeep Parwal, founder of SPA Capital, said further liquidity in Nifty stocks will push valuations higher, increasing entry risks for new investors while providing an exit window for existing shareholders.

Investing in infrastructure development in India or monetizing current operational infrastructure assets could be a superior alternative, he said.

Sberbank also plans to invest $100 million in technology, team expansion and new offices. The bank has already submitted an application to the central bank to open branches in ten cities in three years. The core IT platform – imported from Russia and redesigned by hundreds of professionals in Bengaluru – is being aligned with Indian regulations.

Sberbank has become a crucial bridge in trade between Russia and India, reducing transaction times from weeks to less than 10 minutes in 80% of cases, without the need for third-country currency.

Published on December 8, 2025