Russia’s trade with India is flourishing and bilateral payments are proceeding smoothly without the glitches that have been distorting trade with other countries, according to Anatoly Popov, deputy CEO of Russia’s largest lender, Sberbank.
Sberbank handles payments for up to 70% of all Russian exports to India. Russia’s trade with India nearly doubled to $65 billion in 2023, with the South Asian country becoming a major importer of Russian oil after the imposition of Western sanctions on Moscow in 2022 over the conflict in Ukraine.
“In 2022, there was a significant increase in the interest of Russian businesses in the Indian market because this market serves as an alternative,” Popov told Reuters in an interview ahead of the Eastern Economic Forum, an economic conference targeting Russia’s Asian partners.
“Today, we are opening accounts in rupees for Russian clients as well. We do not rule out the possibility that, in addition to being a means of payment, the rupee may also become a means of savings,” he added.
Sberbank’s branch in India has offices in Delhi and Mumbai, as well as an IT center in Bengaluru. The number of staff in its Indian offices increased by 150% this year, having said in April they wanted to hire 300 IT personnel for the hub in Bengaluru.
Sberbank is under Western sanctions and therefore cannot make transactions in U.S. dollars and euros or use the SWIFT system for international transfers. However, Popov said the bank had not experienced any problems in India.
“Sberbank is a full participant in all Indian payment and interbank systems. There are no restrictions on its operations,” Popov said. India has not joined any anti-Russian sanctions and maintains friendly relations with Russia, a fellow member of the BRICS group of emerging economies.
Smooth transactions
Sberbank said transactions in roubles and rupees were proceeding smoothly, with 90% of them taking only a few hours to complete. This is in stark contrast to other trading partners such as China.
Popov said growing Indian exports to Russia had helped solve the problem of surplus rupees held by Russian companies, which hampered bilateral trade in 2023, as rupees were used to pay for imports from India.
“The problem has been solved, there is no rupee surplus any longer,” Popov said, adding that to achieve balanced trade, India still needs to increase its exports to Russia tenfold. An Indian source told Reuters on Aug. 14 that the rupee surplus had dropped to a “few million dollars.”
India, the world’s fifth largest economy, has almost everything Russian importers are looking for, Popov said.
“India is a self-sufficient, vast economy capable of meeting its own needs. Therefore, any goods that Russia previously imported can be purchased in India,” he said.
Sberbank is also developing its offering of hedging instruments, which already includes forwards and options, as well as other products such as rupee-denominated loans for Russian companies at rates significantly lower than in Russia.
He thanked Indian regulators for the opportunity to operate through rupee-denominated “vostro” accounts, which domestic banks can hold on behalf of foreign banks in India, facilitating their operations.
Popov said the current mechanism of converting roubles and rupees was functioning well and did not require any third-party currencies for settlement. However, he added that stock exchange trade in rupees would increase transparency.
