India is looking into various payment options to continue trading with Russia, including the one used to settle payments with Iran. Foreign banks with no operations in countries that have placed sanctions on Russia, as well as routing payments through Russian banks that are unfettered by the restrictions, are among the options being considered. To settle commerce with Iran, third-country banks were used.
Sberbank and Gazprombank, two significant Russian banks, are now free from sanctions because they are the primary payment routes for EU gas and oil supplies from Russia.
“This is something we’re looking into. Payments can be done in euros even though these banks face US sanctions because these transactions are still being carried out until more penalties are imposed “According to a government official, the full impact of the limitations will not be realised for some time.
Another possibility being considered is the procedure utilized by the Russian central bank to settle Russian debt through a currency auction. The loan is repaid by the export of specific goods and services. India-Russia trade is worth roughly $10 billion, or 1.3 per cent of India’s overall trade.
According to another source familiar with the situation, the Reserve Bank of India and the government are in daily communication about events as they try to manage the fallout and ringfence of the economy. Any decision on the topic will be made at the highest levels of government, in collaboration with the minister of foreign affairs. According to reports, India does not want to take any hasty actions that could be regarded as weakening Western economic sanctions against Russia.
Following a threat of US sanctions over a defence agreement with Russia, India and Russia decided to make payments through the rupee-ruble exchange in 2014. But there’s a catch. Because the ruble is not fully convertible, it is difficult to trade in currency markets with few restrictions. According to currency specialists, this results in low trade volumes for the currency pair. The ruble has plummeted to a sharp drop against the US currency since the battle broke out last week. The Russian ruble is currently cheaper than the Indian rupee. It means India will have to pay less for Russian products. Smaller Russian banks, local currency trading, and lenders from other countries will now be considered by the two countries.
Apart from that, India’s premier payment service, the Unified Payments Interface, may be linked to Russia’s System for Transfer of Financial Messages.
Edited by- Subbuthai Padma
Published by- Radhika. N
