India's government is engaged on the issue of facilitating payments with Russia, and the Reserve Bank of India will do whatever the government decides, Deputy Governor Michael Patra said June 24. He did not offer any other details.
The Deputy Governor's statements assume significance as the government had remained tight-lipped on the issue even as multiple meetings between banking representatives of both nations had taken place.
Ever since the Russian invasion of Ukraine and the subsequent barrage of sanctions on Moscow by the West, trade between India and Russia has depended on routing transactions through smaller Russian banks which are as yet untouched by sanctions.
Both nations had initially focused on establishing a barter mechanism involving a set of commodities.
A key part of this would be an agreement on valuation since commodity prices fluctuate frequently and widely and whether the valuation of the select products would happen in Russian rubles or Indian rupees.
However, Russia and India are now seriously discussing long-term options such as trading in local currencies (rupee-ruble trade), or a rupee auction mechanism by the Russian central bank. India has had a history of trading in local currencies with Russia and Iran earlier.
Reports had suggested that officials from RBI and Russia's central bank had met at least once in Mumbai back in April. Meanwhile, officials from a number of Russian banks met their Indian counterparts and RBI officials in New Delhi last week.Russia was the 25th largest trade partner for India as of 2021-22, but fast-expanding imports of Russian crude oil are expected to push the country higher on the list.