Russia Ukraine war: RBI asks banks to find alternative mechanism for Russia payments

The Reserve Financial institution of India (RBI) is claimed to have instructed Indian banks to discover an alternate mechanism of funds for commerce if the quickly creating international opposition in opposition to Russia results in Moscow’s whole elimination from the remainder of the world’s banking system.

The US and its allies have determined to chop main Russian banks from the SWIFT platform, which is now the accepted international mechanism for digital cash switch amongst banks. Some Russian banks, nonetheless, nonetheless stay inside this funds system.

At a high-powered assembly with choose banks, the RBI sought recommendations from high executives on conducting cost settlements with Russian lenders within the present situation, sources conversant in the event instructed ET.

Bankers attending the assembly couldn’t give you a right away answer, they mentioned. The RBI didn’t reply to ET’s queries.

The US has put contemporary sanctions on Russia’s VTB Banking, snapping the lender’s entry to the worldwide monetary funds system.

Whereas not all Russian banks are beneath sanctions, the Indian banking regulator desires to organize native lenders for such an eventuality, sources mentioned. SWIFT is the prevalent interbank funds settlement platform.

Safety Considerations


For years, banks globally are used to SWIFT as a result of security measures it provides. Banks are involved about potential safety gaps concerned in sending confidential cost particulars through emails. Earlier than SWIFT, info associated to inter-bank funds had been exchanged and confirmed through telex. The assembly of bankers assumes significance amid speak that New Delhi is dusting off the rupee-rouble commerce plan, weighing the choice of placing it into observe to make sure unhindered funds involving the 2 international locations.

Prior to now, when the US imposed sanctions on Iran, India allowed banks comparable to Uco Financial institution and IDBI Financial institution, with minimal exposures to the US, for funds settlement in respective currencies. An identical choice is now being thought of.

ET had earlier reported that an alternate choice to route cash to Russia was found out final yr after funds price billions of {dollars} had been bunched up because the State Financial institution of India (SBI), in anticipation of financial sanctions on Moscow, did not course of the funds.