India, Russia meet to firm up payment channels

New Delhi, June 16

The central banks of India and Russia along with prominent commercial banks of both countries concluded their third meeting today to firm up a payment system for unhindered trade, now that the sanctions are likely to stay.

The discussions are expected to close gaps on several issues and enable the principals in New Delhi and Kremlin to take a view on whether such a payment mechanism is feasible. With India emerging as a major buyer of discounted Russian oil, a need is being felt to put a mechanism in place that does not get tripped by sanctions on Moscow-based banks.

The bankers are understood to be discussing the “Loro”, “Nostro” and accounts. In Italian, “Loro” means “Our” and Nostro means “You”. “Loro” is a third-party account involving a bank holding an account in another bank.

Indian banks, including the National Payments Corporation of India and Foreign Exchange Dealers Association of India (FEDAI), were listed as attendees while SberBank ad VEB Bank were pencilled in from the Russian side for a discussion on “Russian-Indian inter-bank consultations with the participation of Russian and Indian financial institutions.”

Western reports claim that almost half of Russian oil transported by ship is headed for Asia, mainly China and India and that Russia was shipping about 36 lakh barrels of oil daily of which a little more than half was going to Asia, a rise of 40 per cent since the Russia-Ukraine conflict began on February 24.