Russia, India to discuss Swift alternative for rouble payments when Lavrov visits New Delhi

Russia needs new cross-border payment plan after its banks were barred from using international Swift payment system following invasion of Ukraine

Rupee-rouble payment plan will allow India to buy Russian oil and weapons, claiming its arms’ purchases are needed to counter China ’s military assertiveness

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Russian Foreign Minister Sergey Lavrov speaks at the Moscow State Institute of International Relations in Moscow. Photo: Russian Foreign Ministry Press Service via AP

Published: 5:05pm, 30 Mar 2022Updated: 11:49pm, 30 Mar 2022

India’s government is considering a proposal from Russia to use a system developed by the Russian central bank for bilateral payments, according to people with knowledge of the matter, as the Asian nation seeks to buy oil and weapons from the sanctions-hit country.

The plan involves rupee-rouble-denominated payments using Russia’s messaging system SPFS, the people said, asking not to be identified discussing confidential deliberations. No final decision has been taken and the matter will probably be discussed when Russian Foreign Minister Sergey Lavrov arrives in India for a two-day visit starting on Thursday.

A finance ministry spokesman was not immediately available for a comment. Lavrov’s visit will coincide with visits by British foreign secretary Liz Truss and US Deputy National Security Advisor for International Economics Daleep Singh.

Russia is seeking a new cross-border payment plan after several of its banks were barred from using the Swift payment system following its invasion of Ukraine. Photo: Reuters

India is keen to continue bilateral trade due to its dependency on Russian weapons and the prospect of buying cheaper oil as global prices surge. Prime Minister Narendra Modi’s government has been pushing back against pressure from Western nations by arguing that arms purchases from Russia are needed to counter China’s growing military assertiveness.

Under the proposal, roubles will be deposited into an Indian bank and converted into rupees and the same system will work in reverse, one of the people said. Undecided elements include whether the exchange rate will be fixed or floating.

Russia also wants India to link its Unified Payments Interface with their MIR payments system for seamless use of cards issued by Indian and Russian banks after Visa Inc. and Mastercard Inc. suspended operations, one of the people said.

The US, along with the European Union, cut off seven Russian banks from Swift – the Belgium-based cross-border payment system operator – including state-controlled VTB, Bank Rossiya and Bank Otkritie. Following the sweeping sanctions, Russia has been looking for alternate mechanisms to continue its trade hit by its war in Ukraine.

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