Some of the Russian funds held in Indian banks are finding their way into domestic government bonds, the Economic Times reported on Tuesday, citing debt market officials.

These Russian funds, which are lying in domestic current accounts, were also being invested in government securities such as treasury bills, the report quoted bank treasury executives as saying.

India's finance ministry and the Reserve Bank of India did not immediately respond to Reuters' requests for comment.

Russia has accumulated billions of rupees in Indian banks and needs to convert them into other currencies, Russian Foreign Minister Sergei Lavrov said on Friday.

With a wider trade gap in favour of Russia, Moscow believes it will end up with an annual rupee surplus of over $40 billion if a permanent rupee payment mechanism is worked out and feels that rupee accumulation is 'not desirable', Reuters reported last week, citing an Indian government official.

While the exact volume of funds moving into Indian sovereign debt is not known, bond traders identified an increase in the ownership pattern of the "others" category of government securities as an indicator, the ET report said. ($1 = 81.7800 Indian rupees) (Reporting by Kashish Tandon; Editing by Savio D'Souza)