New Delhi, Feb 6 (PTI) A Rupee-Rouble mechanism for trade between India and Russia has been established, Russian Ambassador Denis Alipov said on Monday while suggesting that Indian banks are adopting a cautious approach to use the payment system possibly because of some apprehensions.
The alternative payment system was put in place to carry on with bilateral trade while avoiding the purview of Western sanctions on Russia which were imposed for its invasion of Ukraine.
“The Vostro accounts have been opened. The mechanism for Rupee-Rouble trade has been established. It is now a matter for the banks to use it. What we see is that many of the Indian banks are over cautious (to use the mechanism),” Alipov said at a conference. The conference on ‘Next Steps in India-Russia Strategic Partnership; Old Friends New Horizons’ was organised by the India Writes Network and the Centre for Global India Insights.
The Rupee-Rouble payment system for trade was rolled out to settle dues in Rupees instead of US Dollars or Euros. Vostro accounts are used to make payments in domestic currency, which in India’s case is the Rupee.
“The banks would like to be on the safe side. It will take some more time for the knowledge that it is not at all detrimental for the Indian banking system,” Alipov said.
The ambassador hoped to see the usage of the payment mechanism.
But at the same time, he asserted that the US Dollar and Euro can be used with the non-sanctioned Russian banks for bilateral trade.
Alipov also said that the ties between Russia and India are under some “stress” due to the current tectonic geo-political shifts in view of the “arrogant” approach of the US-led West on the Ukraine conflict including its sanction regime against Moscow that caused disruptions in financial and logistics mechanisms.
“When I spoke about stress, I specifically meant economic relations. The sanctions that interfered.. they disrupted the transaction mechanisms and the logistics mechanisms. Insurance issues are also important,” he said.
“On all these issues, both sides are in very close dialogue. They are very precise and concrete suggestions and a very professional exchange of ideas and proposals from both sides,” he said.
“All these issues have been attended to and we are hopeful that we adjust to these new realities. Such established mechanisms like SWIFT are preferable because they are known to each other, they are very simple, very easy,” the ambassador said.
“We want to continue our economic relations, our trade ties. We obviously need to invent something new because, I do not foresee that those restrictions will be lifted in the near future,” he said.
The SWIFT is the global financial system that allows the smooth transfer of money across the world.
Alipov also asserted that Moscow will maintain the levels of exports, including petroleum products to India, notwithstanding the Western price cap on Russian crude oil.
The ties between India and Russia remained strong notwithstanding Moscow’s invasion of Ukraine.
India’s import of Russian crude oil has gone up significantly in the last few months despite increasing disquiet over it in many Western countries.
India has not yet condemned the Russian invasion of Ukraine and it has been maintaining that the crisis must be resolved through diplomacy and dialogue. PTI MPB ANB ANB
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