The IETO is cooperating with local businesses in India who are interested in doing business with Russia. The lenders and their separate authorities are in discussions to set up an uniform reference exchange rate. The Reserve Bank of India and the Central Bank of Russia will make this announcement every day.
According to reports, the Indian Banks’ Association (IBA) is helping to broker negotiations between more than 15 Russian banks and Indian lenders, clearing the way for bilateral transactions to be conducted in both countries’ native currencies. Both nations’ lending institutions are in talks about setting up alternative trading mechanisms not dependent on the US currency.
People familiar with the situation told Economic Times that the banks are also attempting to create a unique reference exchange-rate structure between the local currencies, the rupee and the rouble.
Petersburg Social Commercial Bank, Zenit Bank, and Tatsotsbank are the Russian financial institutions involved in the discussions. Bank of India, Canara Bank, and Uco Bank are just few of the Indian partners that are expected to create specialized trade accounts on behalf of the lenders.
In order to facilitate commerce between India and Russia, the Indian Economic Trade Organization (IETO) is cooperating with local businesses. Talks are underway between lenders and their individual authorities to set up a bespoke shared reference exchange rate. The Reserve Bank of India (RBI) and the Central Bank of Russia (CBR) will make daily announcements of this.
Exchange rates between currencies are normally derived from the prevalent rate of a currency in reference to the US dollar.
Local lenders include State Bank of India, IndusInd Bank, Bank of Baroda, and Yes Bank, while other Russian institutions alleged to be involved include Centro Credit Bank, Bank Soyuz, and MTC Bank.
“Many Russian financial institutions are in discussions with a few Indian financial institutions. Small and medium sized public sector banks would see the possibility of expansion as a result of commerce with Russia conducted in rupees, which will allow for cheaper oil purchases “according to Indian Economic Trade Organization President Asif Iqbal.
It has been speculated, however, that the SBI, with its robust dollar-denominated balance sheet, may choose not to take part in such bilateral trading.
While this was going on, on July 11 the RBI allowed international trade invoices and payments to be made in rupees, which might lead to increased bilateral commerce with Russi, which has been hit with many Western sanctions due to its support of Ukraine’s separatist movement.
It’s worth noting that in June, India bought Russian products to the tune of $4.23 billion, a figure that’s risen almost seven times over the same month in the previous year. During that time, it was claimed that $3.02 billion worth of crude oil was imported from Russia, accounting for roughly 71% of all crude oil imports.
