Bank of Russia
Moscow has expressed concerns over a lack of “progress” and proposed radical new initiatives to deepen financial cooperation, two months after the Reserve Bank of India (RBI) permitted the opening of nine “Vostro” accounts in two Indian banks to facilitate rupee trade with sanctions-hit Russia.
The creation of a “India-based financial institution with Russian ownership” that would be exempt from third-party sanctions is the proposal’s most significant suggestion.
And a specialised financial technology business established in India that would allow Indian credit institutions to use SPFS, the Russian financial messaging system that took the place of the banned SWIFT. SPFS was developed by the Bank of Russia.
Deputy Governor T Rabi Sankar of the RBI and First Deputy Governor of the Bank of Russia Vladimir Chistyukhin discussed these recommendations in a message last month.
The Russian MTS Bank, which was not subject to third-party sanctions, was also stated to be “ready to explore its prospective involvement” in such a project in Chistyukhin’s message.
A meeting between the representatives of the RBI, the Bank of Russia, and MTS Bank has been asked in order to examine legal and regulatory matters.
Chistyukhin will serve as head of the Russian-Indian Working Group on Banking and Finance conference, which will take place in India from February 10 to 12.Sankar and Chistyukhin were unavailable for comment.
Chistyukhin emphasised that although the RBI had stated during consultations between the two central banks in New Delhi in June 2022 that it had no objection to “direct” talks between the Bank of Russia and the Indian Banks’ Association (IBA) regarding the use of SPFS, this had not actually taken place.
In reality, he said that despite Bank of Russia representatives contacting IBA representatives “many times,” “no progress has been accomplished.” He noted that not even a videoconference call between the two parties had occurred.
When asked about this correspondence, a Russian official declined to comment, but she did say that the “videoconferencing call was being organised very soon.”
The Deputy Governor of the Bank of Russia also suggested “cross-border integration of the Russian and Indian quicker payments systems” to the RBI.In accordance with this, a nondisclosure agreement that would connect the Russian Faster Payments Service (SBP) with the Indian Unified Payments Interface would be discussed by the Bank of India and the Indian NPCI International Payments Limited (NIPL) (UPI).