New Delhi:
The country’s second-largest bank, Punjab National Bank (PNB), has said it is awaiting advice from the Ministry of Finance and the Reserve Bank of India (RBI) regarding SWIFT-related transactions with Russian entities.
In view of the ongoing war between Russia and Ukraine, several countries including the US, Canada and certain European countries have blocked some Russian banks from using SWIFT, a system used for global banking transactions.
“…we have not received any advice from the RBI/Ministry of Finance with regard to SWIFT-related transactions involving Russia. Any action in this regard will be taken upon receipt of guidance from RBI or the Ministry of Finance,” PNB said in response to questions about Russia-related transactions.
Meanwhile, sources said the State Bank of India (SBI) has stopped processing transactions from Russian entities sanctioned by the West over Moscow’s invasion of Ukraine.
SBI has been informed that it has issued a circular because it fears that any transaction with entities or sectors subject to sanctions will also lead to sanctions. Russia is one of the largest suppliers of defense products and equipment to India, mostly under government contracts.
India-Russia bilateral trade has been $9.4 billion so far this fiscal year, up from $8.1 billion in 2020-21.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is the world’s premier banking messaging service connecting approximately 11,000 banks and institutions in more than 200 countries, including India.
The Belgium-based SWIFT system is considered essential for the smooth functioning of global finances and its exclusion from it would hit the country hard.
India’s main imports from Russia include fuels, mineral oils, pearls, precious or semi-precious stones, nuclear reactors, boilers, machinery and mechanical devices; electrical machinery and equipment and fertilizers.
Major export items from India to Russia include pharmaceuticals, electrical machinery and equipment, organic chemicals, and vehicles.
Also in the past, India had devised a mechanism to pay for imports from Iran when sanctions were imposed on the Persian Gulf state.
The war between Russia and Ukraine entered its 11th day on Sunday, with fighting intensified in the Ukrainian capital Kiev and other major cities.
Recently, the major economies of the Group of Seven (G-7) have imposed punitive sanctions on the Russian central bank.
They also decided to remove Russian banks from the SWIFT interbank system – which is intended to isolate Russia from world trade. India has so far taken a neutral stance on Russia’s invasion of Ukraine and has asked both countries to resolve the issue diplomatically.
Removing banks from SWIFT is considered a heavy curb because almost all banks use the system. Russia relies heavily on the SWIFT system for its major oil and gas exports.