Bankers see trade, forex as concerns amid Russia curbs

Bankers on Friday shared their concerns with the Reserve Bank of India on their exposure to Russian entities and on future transactions with Russian lenders following US-led sanctions against them, two executives aware of the matter said.

The discussion took place in a meeting attended by representatives of Mumbai-based public sector, private and foreign banks, and executive directors of the central bank.

Last week, RBI had sought details from banks about their exposure to Russian entities and this meeting was meant to take that discussion forward, said the bankers cited above.

With the US sanctions on Iran in 2012 and 2018, banks could not deal in dollars, but refiners were able to route funds through state-owned Uco Bank because it has only a few foreign branches and used euro and rupee payments instead of dollars.

The arrangement was worked out between the governments of India and Iran.

The government and RBI are exploring the possibility of activating a rupee-ruble trade pact to process payments with those Russian entities that have been put under the sanctions.

While the government is also looking at other alternatives like routing payments through a third country where both India and Russia have a presence, bankers rule out this kind of an arrangement.

Government data shows trade between India and Russia was worth $8.1 billion in FY21, with Indian exports of $2.6 billion and imports of $5.48 billion.