The move follows the Russian government's decision to revert to the system of allocating rupee repayment funds to various state bodies, regions, ministries and firms for utilising them to import goods from India.The banking arrangement agreed upon by the RBI and the Bank for Foreign Economic Affairs of Russia (BFEA) was signed on February 16, 1998, as an addendum to the earlier one dated September 6, 1993.

Earlier, a committee comprising representatives of the RBI, Indian commercial banks, export credit and guarantee corporation (ECGC) and BFEA was asked to sort out operational issues, if any.

The fifth session of the working group on trade and economic cooperation between India and Russia and the Indo-Russian inter-governmental committee advised the concernedauthorities to operationalise the arrangement at the earliest.

Following the financial crisis, Russia decided to go back to the system of allocating funds to its organisations to enable them to buy from India items like pharmaceuticals, rice, tea, coffee, sugar and other essential as well as consumer good items. The rupee auction by BFEA had been stopped from October 14, 1998.

It is learnt that rupee allocation will be immediately made in favour of Moscow Administration (equivalent to $400 million in rupees to import tea, rice, sugar, tobacco and other foodstuff) and to the ministry of health (equivalent to $110 million for import of insulin, anti-TB drugs and other medicines.