Russia Unveils Alternative Payment System For Dollarless Trade With India

India's Foreign Minister Subrahmanyam Jaishankar and his Russian counterpart Sergey Lavrov in New Delhi [DrSJaishankar/Twitter/Handout via Reuters]

As a measure against western governments continued sanctions on Russia, Moscow has unveiled an alternative to SWIFT.

Vantage News gathered that the Indian government is reportedly considering Moscow’s proposal to turn to the Russian payment system, which allows direct rupee-ruble transfers in bilateral trade.

The mechanism developed by the Russian central bank is expected to boost commerce between the two countries by avoiding dollar-denominated trade, and allow the world’s third biggest oil consumer to continue purchases from Russia, bypassing Western sanctions.

The scheme involves rupee-ruble-denominated payments via Russia’s messaging system, SPFS. The final decision is expected to come after a two-day visit of Russian Foreign Minister Sergey Lavrov to India, according to unnamed people with knowledge of the matter, as quoted by Bloomberg.

Russian Foreign Minister Sergey Lavrov begun meeting with India’s leaders in New Delhi after seeing his Chinese counterpart earlier this week.

The two Asian powers are among  countries to have not condemned Russia’s military actions in Ukraine in late February.

After Lavrov visited China this week, Beijing said it was “more determined” to develop bilateral ties with Russia.

Russian central bank officials will reportedly visit India next week to discuss the details.

According to Bloomberg’s sources, the Reserve Bank of India regularly meets with executives from the country’s banking system to discuss matters such as exposure to Russia and risks from the latest sanctions.

The arrangement is expected to allow Indian exporters keep doing business with Russia despite the latest penalties that ban the use of the SWIFT interbank messaging system. It would allow India to continue purchases of Russian oil, weapons, and other goods.

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Under the proposal, rubles will reportedly be deposited into an Indian bank and converted into rupees, and the same system will work in reverse. Russia also wants India to link its Unified Payments Interface with their MIR payments system for seamless use of cards issued by banks of both countries after Visa and Mastercard suspended operations in Russia.

Last year, India exported $3.3 billion worth of goods to Russia, mostly pharmaceutical products, tea, and coffee, and imported $6.9 billion worth of Russian products, including arms and defense goods, mineral resources, fertilizers, metals, diamonds, and other precious stones.

The world’s sixth biggest economy also imports Russian oil, with the country’s major refiner, Indian Oil Corp, increasing purchases over the past month.

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