India has decided to authorise the country's biggest lender SBI to promote rupee trade with Russia and soon Moscow will name its bank to operationalise the mechanism, exporters' body FIEO said on Wednesday.
The RBI in July issued a detailed circular asking banks to put in place additional arrangements for export and import transactions in Indian rupees in view of increasing interest of the global trading community in the domestic currency.
Currently, a large part of bilateral trade between India and Russia is getting settled in rupee due to sanctions imposed by the US and Europe following Moscow's attack on Ukraine.
The RBI had said for settlement of trade transactions, the concerned banks will require special rupee vostro accounts of correspondent bank/s of the partner trading country.
Federation of Indian Export Organisations (FIEO) president A Sakthivel said that the SBI (State Bank of India) is equipped with doing business in rupee with Russia, but Moscow has to identify one bank.
"Yesterday commerce secretary (B V R Subrahmanyam) was there with us in the evening.
"He said that very soon Russian government is going to identify a bank...Rupee trade with Russia will happen," Sakthivel told reporters.
He said that Russia is expected to announce the name of the bank in 15 days.
"So the SBI is already identified here...We have a good rupee payment mechanism in Iran, so same thing will happen (with Russia)...SBI is a huge bank to cater the need of exporters," he added.
FIEO has demanded from the government that rupee trade should be entitled for benefits currently available for trade in major currencies.
Once the mechanism comes into play, "we do not want to bother about the foreign currency fluctuations. Indian rupee will speak for itself ...I think very soon it will happen," Sakthivel said.
On September 7, Reserve Bank and the finance ministry asked top management of banks and representatives of trade bodies to push exports and import transactions in rupee.
According to sources, it was stressed during a meeting that banks should connect with their foreign counterparts for opening special rupee vastro accounts to facilitate cross-border trade in Indian currency rather than popular mode dollar.
They had stated that countries like Sri Lanka, Argentina and Zimbabwe may be interested in settling bilateral trade in rupee.
The announcement by the Reserve Bank of India (RBI) to allow cross-border trade transactions in rupee is a timely move and a step towards internationalisation of the currency.
In 2021-22, India's exports to Russia stood at $3.25 billion, while imports aggregated at about $10 billion.
