How Can Indian Exporters Receive Payments from Russia and Sanctioned Regions?
- Author:
- Manoj Sharma
- Verified by:
- Editorial team
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Short answer
Indian exporters can receive payment from Russia through an AD bank in India, in a foreign currency or in rupees through a Special Rupee Vostro Account under RBI Circular No. 10 of 2022. The RBI export rules cited here do not name Russia as a restricted country. Banks may still hold or refuse payments involving sanctioned banks, persons or regions.
| Applies to | Governed by | Deadline | Penalty | Last verified |
|---|---|---|---|---|
| Indian exporters of goods, software and services, including freelancers, whose buyer is in Russia or whose payment passes through a bank, person or region covered by sanctions | FEMA (Export and Import of Goods and Services) Regulations, 2026 (Regulations 4, 5, 8, 17 and 18), A.P. (DIR Series) Circular No. 10 of 11 July 2022, the FEMA (Manner of Receipt and Payment) Regulations, 2023, and your AD bank's KYC and anti-money-laundering policy | 9 months from invoice (services) or shipment (goods); 12 months where the export is invoiced or settled in rupees; your AD bank may extend | Not applicable as a separate penalty; exports left unrealised for over a year past the due date trigger the full advance or LC condition in Regulation 13 | 8 Oct 2026 |
What are the RBI rules for receiving export payments from Russia in India?
The RBI rules for receiving export payments from Russia are the same FEMA export rules that apply to any other country, plus an optional rupee settlement route. The payment must come through an AD bank, be declared, and be realised on time (FEMA 23(R)/2026-RB).
- Currency: Trade receipts from countries outside the Asian Clearing Union may be in Indian rupees or any foreign currency (FEMA 14(R)/2023-RB, Regulation 3(2)(I)(a)(iii)).
- Rupee route: An AD bank in India may open a Special Rupee Vostro Account (SRVA) for a correspondent bank of any partner country, and exporters are paid in rupees from that account (Circular No. 10, para 3).
- Bank check: An AD bank credits export proceeds only after it is satisfied the transaction is genuine (Regulation 4(2)).
- Declaration: Service exporters file the EDF within 30 days from the end of the invoice month (Regulation 3(2)). See EDF form for exports.
- Deadline: Proceeds must be realised within nine months, or twelve months where the export is invoiced or settled in rupees (Regulation 5(1)).
- Reporting: Your AD bank reports the receipt in FETERS (Regulation 18(2)).
From 1 October 2026 these regulations apply and the Master Direction on export of goods and services stands superseded (A.P. (DIR Series) Circular No. 20, para 4). Circular No. 10 on rupee settlement is not in that circular's list of superseded circulars, and Regulation 17 tells AD banks to keep following RBI's rupee settlement framework (Regulation 17).
Which payments from Russia and sanctioned regions get extra checks from Indian banks?
Payments from Russia that come through ordinary, non-sanctioned banks are handled like other export receipts, with the usual documents. Extra checks are likely when the payment involves a country on the FATF call-for-action list, a person or bank on a sanctions list, or a third party paying on the buyer's behalf.
| Situation | How Indian rules treat it | Why | Best for |
|---|---|---|---|
| Buyer in Russia pays in a foreign currency through a bank that is not sanctioned | Allowed, with usual export documents and checks | Receipts may be in any foreign currency (Regulation 3(2)(I)(a)(iii)); bank checks genuineness (Regulation 4(2)) | Freelancers and service exporters with a Russian client |
| Buyer in Russia pays in rupees through an SRVA | Allowed, 12 month realisation period | Circular No. 10, para 3 and first proviso to Regulation 5(1) | Exporters whose buyer's bank holds an SRVA in India |
| Buyer's bank is on a foreign sanctions list, such as a US list | Indian rules do not bar it, but your bank or its correspondent bank may refuse | Foreign sanctions can reach banks outside that country; the US publishes guidance for foreign financial institutions on Russia-related sanctions (OFAC Russia sanctions page) | Exporters whose payment is held at an intermediary bank |
| Payment from a country on which FATF has called for countermeasures (DPRK, Iran as of June 2026) | No SRVA for that country's correspondent bank; FATF calls on all jurisdictions to apply countermeasures | Circular No. 10, para 10; FATF call for action, 19 June 2026 | Exporters checking a new market |
| Payment from a third party, not the buyer | AD bank may allow if satisfied the transaction is bona fide | Regulation 8 | Buyers who pay through a group company or agent abroad |
| Person or entity on a UN Security Council sanctions list | Banks screen customers under their KYC policy; ask your AD bank which sanctions lists it checks | RBI's KYC Directions for commercial banks set the KYC rules banks follow | Anyone whose client or client's owner may be listed |
How do you receive a payment from a Russian client in India step by step?
You receive a payment from a Russian client by agreeing the currency and route with your AD bank first, invoicing correctly, and giving the bank the documents it needs to show the export is genuine. The steps below cover both the foreign currency and the rupee routes.
- Ask your AD bank, before you sign the contract, whether it will accept payments from your client's bank and in which currency. Banks set their own policy, and a refusal is easier to handle before work starts.
- Pick the route. For rupees, check whether your client's bank holds a Special Rupee Vostro Account with an Indian AD bank. RBI's FAQ says SRVA details are in the 'SRVA Directory' on FEDAI's website (RBI SRVA FAQ, Q16).
- Check that the client, its owners and its bank are not on a sanctions list your bank screens against. Ask your bank which lists it uses.
- Raise the invoice in the agreed currency, naming the same buyer who will pay. If someone else will pay, tell your bank before the money arrives.
- File the EDF within 30 days from the end of the invoice month (Regulation 3(2)).
- When the money arrives, give the bank the invoice, contract or proof of service and the purpose of the payment. See purpose code for freelancers.
- Make sure the full value is realised within nine months, or twelve months for rupee-invoiced or rupee-settled exports (Regulation 5(1)).
How does rupee settlement work for exports to Russia?
Rupee settlement works through a Special Rupee Vostro Account that the Russian buyer's bank (or another correspondent bank) holds with an Indian AD bank. The Indian exporter is paid in rupees from the balance in that account (Circular No. 10, para 3). Since 5 August 2025, AD banks no longer need RBI approval to open an SRVA (RBI press release 2025-2026/839).
- Exports settled this way carry the usual documentation and reporting requirements (Circular No. 10, para 4).
- An AD bank with an SRVA may open an additional special current account for an exporter, used only for export settlement (FED Circular No. 08).
- The AD bank maintaining the SRVA reports the transactions through it (RBI SRVA FAQ, Q14).
- Read more in Special Rupee Vostro Accounts and invoicing exports in rupees.
Why do Indian banks refuse or hold payments linked to Russia?
Indian banks refuse or hold payments linked to Russia mainly because of their own risk policies and the sanctions their correspondent banks must follow. An Indian bank credits an export receipt only after satisfying itself that the transaction is genuine (Regulation 4(2)), and must report doubtful transactions to the Directorate of Enforcement (Circular No. 20, para 3).
- Payments in US dollars or euros often pass through banks in other countries, which apply their own sanctions laws. The US Treasury lists Russia-related sanctions and guidance for foreign financial institutions (OFAC).
- A payment can be held because the sender bank, a shareholder of the buyer, or the region the goods or services relate to appears in a screening hit.
- See international payment stuck and AML checks on export receipts.
Can a buyer in Russia pay through a company in another country?
Yes, an AD bank may permit a third-party payment for an export if it is satisfied that the transaction is bona fide (Regulation 8). Expect the bank to ask why the third party is paying and how it is linked to the buyer. See third-party payments for exports.
Does a rupee payment from a Russian client count as export of services for GST?
A rupee payment counts as export of services for GST only when it comes through a route RBI permits. The IGST Act requires payment 'in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India' (IGST Act, section 2(6)(iv)). The GST Council recommended a circular to clarify the admissibility of export remittances received in Special INR Vostro accounts (52nd GST Council press release). See GST on export of services.
What documents and deadlines apply when receiving payment from Russia?
Receiving payment from Russia needs the same core documents and deadlines as any export, and banks often ask for more detail on the buyer and the payer. The table lists what the rules require and what banks commonly ask for, under the rules in force from 1 October 2026.
| Requirement | Rule or practice | Source | Best for |
|---|---|---|---|
| EDF for services | Within 30 days from the end of the invoice month; one EDF can cover a month's exports | Regulation 3(2) | Freelancers and service exporters |
| Realisation (foreign currency) | 9 months from invoice (services) or shipment (goods) | Regulation 5(1)(a) | Exporters paid in dollars, euros or other currencies |
| Realisation (rupees) | 12 months from invoice or shipment | first proviso to Regulation 5(1) | Exporters settled through an SRVA |
| Extension | AD bank may extend if satisfied with the reasons | second proviso to Regulation 5(1) | Exporters whose payment is held or delayed |
| EDPMS closure up to Rs 10 lakh | On the exporter's declaration, or quarterly in bulk | Regulation 4(2) | Small exporters and freelancers |
| Third-party payer | AD bank approval based on bona fides | Regulation 8 | Buyers paying through a group company |
| Invoice, contract, buyer details | Banks ask for these to check the transaction is genuine | Regulation 4(2) | Anyone whose payment is under review |
What happens if a payment from Russia is blocked or not received in time?
If a payment from Russia is blocked or not received in time, the export stays open in EDPMS and the realisation clock keeps running. You are outside the FEMA time limit unless your AD bank extends it, and long delays limit how you can export later.
- Open entry: Your AD bank must monitor and follow up on unrealised exports (Regulation 5(2)).
- Extension: Ask your AD bank for more time and explain the delay (second proviso to Regulation 5(1)). See extension of the realisation period.
- Write-down: Your AD bank may allow a reduction in export value if satisfied with your reasons; up to Rs 10 lakh per invoice this can be on your declaration (Regulation 6).
- Full advance: If proceeds stay unrealised for over a year after the due date or extended date, further exports need full advance or an irrevocable letter of credit (Regulation 13).
- Returned funds: A payment rejected by an intermediary bank may be returned to the sender, frozen, or delayed. Ask your bank for the reason in writing.
Raise the issue with your AD bank in writing. Banks must have a policy with an escalation process for grievances and an appeal handled at a higher level (Regulation 19(2)). Keep the buyer's correspondence and ask for an extension before the deadline. See export proceeds not realised.
Which RBI rules cover receiving payments from Russia and sanctioned regions?
No single RBI rule covers Russia. The FEMA export regulations, the rupee settlement circular and banks' KYC directions together set how payments from Russia and higher-risk regions are received. The table lists each rule and what it means for an exporter.
| Circular or regulation | Clause | Date | Plain meaning | Best for |
|---|---|---|---|---|
| FEMA 23(R)/2026-RB | Regulations 3, 4, 5, 8, 18 | In force 1 October 2026, amended 22 September 2026 | Declare, realise and report export proceeds; bank checks genuineness | Every exporter |
| FEMA 23(R)/2026-RB | Regulation 14 | In force 1 October 2026 | AD banks follow RBI instructions on exports against repayment of State credits granted by the erstwhile Soviet Union | Exporters in this specific inter-bank arrangement |
| FEMA 23(R)/2026-RB | Regulation 17 | In force 1 October 2026 | AD banks follow RBI's rupee invoicing and settlement framework | Exporters using rupee settlement |
| A.P. (DIR Series) Circular No. 10 | Paras 3, 4, 10 | 11 July 2022 | Rupee settlement through SRVAs; no SRVA for banks from FATF countermeasure jurisdictions | Exporters paid in rupees |
| RBI press release 2025-2026/839 | Whole release | 5 August 2025 | SRVAs no longer need prior RBI approval | Exporters asking why more SRVAs exist |
| A.P. (DIR Series) Circular No. 20 | Paras 3 and 4 | 16 January 2026, effective 1 October 2026 | Old export Master Direction superseded; AD banks report doubtful transactions to the Directorate of Enforcement | Exporters reading older guides |
| FEMA 14(R)/2023-RB | Regulation 3(2)(I)(a) | 20 December 2023, amended 10 February 2025 | Which currency trade receipts may be in, by country group | Checking a specific country |
| RBI KYC Directions for commercial banks | Whole direction | 2025, updated 1 October 2026 | KYC and screening rules banks follow | Exporters facing KYC questions |
What are the common mistakes when receiving payments from Russia in India?
- No bank check: Signing a contract before asking your AD bank whether it will accept payments from the client's bank.
- Mixed payers: Letting a different company pay without telling the bank first, which can lead to a hold under the third-party rules.
- Wrong deadline: Assuming the twelve month period applies to every Russian client. It applies only where the export is invoiced or settled in rupees.
- Old rules: Relying on guides that cite the export Master Direction, which was superseded from 1 October 2026.
- Skipping EDF: Treating rupee receipts as domestic income and not filing the EDF, which still applies to rupee-settled exports.
- Thin records: Sending only an invoice when the bank asks for proof of service, contract and buyer details.
How did we verify this?
Every rule, deadline and form on this page is linked to its official source, checked on the dates below.
- Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB, amended up to 22 September 2026, Regulations 3(2), 4(2), 5(1) and provisos, 5(2), 6, 7, 8, 13, 14, 17, 18(2), 19(2) (checked 8 Oct 2026)
- RBI A.P. (DIR Series) Circular No. 20, Export and Import of Goods and Services, RBI/2025-26/194, 16 January 2026, Paras 3 (doubtful transactions to DoE) and 4 (supersession); Annex (checked 8 Oct 2026)
- RBI A.P. (DIR Series) Circular No. 10, International Trade Settlement in Indian Rupees (INR), RBI/2022-2023/90, 11 July 2022, Paras 3, 4, 6, 10 (checked 8 Oct 2026)
- RBI FAQ: Special Rupee Vostro Account (SRVA), updated as on 30 July 2026, Q14, Q16 (checked 8 Oct 2026)
- RBI press release 2025-2026/839, Revised procedure for opening of Special Rupee Vostro Account (SRVA), 5 August 2025, Removal of prior RBI approval (checked 8 Oct 2026)
- RBI FED Circular No. 08, Opening of additional Current Account for exports proceeds, RBI/2023-2024/86, 17 November 2023, Para 2 (checked 8 Oct 2026)
- Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, Notification FEMA 14(R)/2023-RB, amended up to 12 February 2025, Regulation 3(2)(I)(a)(i) to (iii) (checked 8 Oct 2026)
- Integrated Goods and Services Tax Act, 2017, section 2 (CBIC tax information portal), Section 2(6)(iv) (checked 8 Oct 2026)
- GST Council, press release on the 52nd meeting, 7 October 2023, Item B(v), export remittances in Special INR Vostro accounts (checked 8 Oct 2026)
- FATF, High-Risk Jurisdictions subject to a Call for Action, 19 June 2026, Countermeasures: DPRK, Iran; enhanced due diligence: Myanmar (checked 8 Oct 2026)
- US Treasury OFAC, Russian Harmful Foreign Activities Sanctions, Guidance for foreign financial institutions (12 June 2024); Executive Order 14114 (checked 8 Oct 2026)
- Reserve Bank of India (Commercial Banks - Know Your Customer) Directions, 2025, updated as on 1 October 2026 (checked 8 Oct 2026)
Frequently asked questions
Is it legal for an Indian freelancer to receive payment from Russia under FEMA?
Yes, the FEMA export regulations do not list Russia as a restricted country. A freelancer must receive the money through an AD bank, file the EDF and realise the proceeds within nine months, or twelve months if paid in rupees. The bank may still decline a payment that fails its own sanctions or risk checks.
Can a Russian client pay an Indian exporter in INR through a Special Rupee Vostro Account?
Yes, a Russian client can pay in INR if its bank, or another correspondent bank, holds a Special Rupee Vostro Account with an Indian AD bank. The client pays its bank, the SRVA is debited, and the Indian bank credits the exporter in rupees. RBI's FAQ points to FEDAI's SRVA Directory for the list of accounts.
Is Russia on the FATF high-risk call-for-action list as of June 2026?
No, Russia is not on the FATF list of high-risk jurisdictions subject to a call for action published on 19 June 2026. That list names the DPRK and Iran for countermeasures and Myanmar for enhanced due diligence. Indian AD banks may not open an SRVA for a correspondent bank from a countermeasure jurisdiction.
Do US OFAC sanctions on Russia apply to Indian banks?
US OFAC sanctions are US law, and Indian FEMA rules do not adopt them. They still matter in practice. Dollar payments can pass through US banks or banks that follow US rules, and OFAC publishes guidance on sanctions risk for foreign financial institutions dealing with Russia. Indian banks therefore often apply these lists in their own screening.
How long can an AD bank hold an export payment from Russia for checks?
No FEMA regulation sets a fixed number of days for an AD bank to finish checks on an export payment. The bank credits the money once it is satisfied the transaction is genuine. If checks run long, ask for an extension of the realisation period and use the bank's grievance and appeal process.
Which purpose code applies to a payment from a Russian client?
The purpose code depends on the service or goods exported, not on the client's country. A software developer uses the software export code and a consultant uses the consulting code, whether the client is in Russia or elsewhere. Your AD bank reports the code in FETERS, so give it an accurate description of the work.
Can set-off of export receivables against import payables be used with a Russian buyer?
Yes, an AD bank may allow set-off of export receivables against import payables with the same overseas buyer or supplier, or their group companies, within the realisation period. This applies to Russian counterparties like any other. Rupee settlement through an SRVA also permits set-off under the 2022 circular, subject to conditions.