3 min readNew DelhiFeb 4, 2023 04:15 PM IST
First published on: Feb 4, 2023 at 04:04 AM IST
Over two months after the Reserve Bank of India (RBI) allowed the opening of nine “Vostro” accounts in two Indian banks to facilitate overseas trade in the rupee with sanctions-hit Russia, Moscow has flagged concerns over lack of “progress” and proposed radical new initiatives to deepen financial co-operation, The Indian Express has learnt.
Most significantly, it has proposed the setting up of an “India-based financial institution with Russian ownership” that would not be subject to third-party sanctions.
And an India-based specialised financial technology company that would enable Indian credit institutions to use Bank of Russia’s Financial Messaging System (SPFS) — the Russian financial messaging system which replaced the sanctioned SWIFT.
These proposals were fleshed out in a communication last month from First Deputy Governor of the Bank of Russia Vladimir Chistyukhin to his RBI counterpart Deputy Governor T Rabi Sankar.
Chistyukhin’s note also mentioned that Russia’s MTS Bank, which was not subject to third-party sanctions, was “willing to discuss its possible involvement” in such a project.
The RBI has been requested to arrange a meeting between its representatives, those of the Bank of Russia, and MTS Bank where legal and regulatory issues could be discussed.
Incidentally, Chistyukhin will chair the meeting of the Russian-Indian Working Group on Banking and Finance scheduled to be held in India from February 10-12.
Neither Chistyukhin nor Sankar was available for comment.
Chistyukhin underlined that during consultations between the two central banks in New Delhi in June 2022, the RBI had noted that it had no objection to “direct” talks between Indian Banks’ Association (IBA) and the Bank of Russia on the subject of use of SPFS but this has not happened in practice.
In fact, he pointed out that “no progress has been made” despite the fact that Bank of Russia officials contacted IBA officials “several times.” Even a videoconferencing call between the two sides has not taken place, he wrote.
A Russian official, when contacted about this communication, declined to comment but confirmed that the “videoconferencing call was being scheduled very soon.”
Another proposal made to the RBI by Bank of Russia’s Deputy Governor calls for “cross-border integration of the Russian and Indian faster payments systems.”
Under this, the Bank of India and the Indian NPCI International Payments Limited (NIPL) will discuss the non-disclosure agreement which would integrate the Faster Payments Service (SBP) of Russia with the Indian Unified Payments Interface (UPI).
These proposals were fleshed out in a communication last month from First Deputy Governor of the Bank of Russia Vladimir Chistyukhin to his RBI counterpart Deputy Governor T Rabi Sankar. 
Share
