The ongoing war in Ukraine is now creating a series of financially worrying knock-on effects across the Indian subcontinent.

Reports from New Delhi indicate that up to $400mn in dividends due to some of India’s major players in global oil and gas projects is currently stuck in a form of financial limbo, unable to be transferred out of Russia because of the ongoing SWIFT ban on Russian cross-border financial transactions.

The news broke when an unnamed official at India’s Ministry of Petroleum and Natural Gas spoke to local media in the Indian capital last weekend.

It is believed that between $300mn, but closer to $400mn in dividends should have been paid over the course of the last year to Indian agencies and individuals.

But with continuing European Union and US-led moves to strangle Moscow financially, the dividends have been left unpaid, leading to rising angst in Indian boardrooms.

The majority of Russian banks have been blocked from using the global cross-border payment system SWIFT since last spring. As a result, this has seen increasing numbers of energy related firms in Asia, India in particular, struggling to both meet payments due to Russia, but also failing to receive payments from the country.

Russia was once the second-largest user base of SWIFT after the United States, with over 300 domestic banks and financial institutions belonging to the Russian National SWIFT Association.

Exceptions do still exist, however, most often linked to payments for oil from Moscow, although actual payments of later fees for investment in projects, including dividend remittances, are not exempt.

As a result, whilst India can still order ever increasing amounts of Russian crude, Indian firms investing in Russia such as Oil and Natural Gas Corp. (ONGC) which profit directly in the form of dividends because of the increase in their orders can no longer receive their profits.

And with Russian crude exports to India increasing to never before seen levels thanks to Moscow offering major discounts to Indian crude buyers, the growth in dividends due is only accelerating.

Latest figures from New Delhi now point to Russian oil making up over 30% of total Indian crude imports.

Other Indian firms including Bharat Petroleum Corporation Ltd (BPCL), Indian Oil, and Oil India Ltd (OIL) are also known to have significant interests in bilateral and multinational oil and gas projects across Russia. None have yet come out with individual claims on overdue dividend payments.

Furthermore, any increase in investments on existing stakes in Russian energy infrastructure by overseas agencies will be similarly affected by the ongoing EU-US led sanctions with later payments of dividends blocked.

In India moves are afoot to remedy the issue, though; attempts to offset dividends owed against potential future oil imports have reportedly been considered, although no concrete decision has yet been announced either way.

Should this be given the green light by Russian authorities in Moscow, sources in India have already hinted at expecting some form of clampdown from those backing sanctions as the EU and US look to close a potential loophole.

Getting funds in and out of Russia at present was thrown a lifeline in recent weeks, with the Chinese Cross-Border Interbank Payment System (CIPS) accepting funds from Bangladesh for Russia’s help in building a nuclear power plant (NPP), and sending the transfer through to Moscow.

For India to even allow inbound transfers through CIPS, though, might just be too bitter a pill for New Delhi to swallow given anti-China sentiment throughout the country in recent years.

Demonstrations broke out across India in 2020 and 2021 following fatal clashes with Chinese troops in the Himalayan border region of Ladakh, and subsequent efforts on both sides since to limit imports and influence regional politics have only hardened the stance of many in India against doing business with Beijing.