By Elena Favrinaya and Gleb Bryansky
MOSCOW (Reuters) – Trade between Russia and India is booming and bilateral payments are going smoothly without the kinds of problems that have hampered trade with other countries, Anatoly Popov, deputy CEO of Russia’s largest bank Sberbank, told Reuters.
Sberbank handles payments for up to 70% of all Russian exports to India. Trade between Russia and India is expected to nearly double to $65 billion by 2023, and India has become a major importer of Russian oil since Western sanctions over the Ukraine conflict were imposed in 2022.
“In 2022, we have seen a significant increase in interest from Russian companies in the Indian market as it serves as an alternative market,” Popov told Reuters in an interview ahead of the Eastern Economic Forum, Russia’s economic conference for Asian countries.
Sberbank has offices in Delhi and Mumbai, as well as an IT center in Bangalore. Its staff numbers have grown by 150% this year, and in April it said it wanted to hire 300 IT staff for its Bangalore facility.
Sberbank is under Western sanctions and cannot transact in US dollars or euros or use the SWIFT system for international payments, but Popov said the bank has 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-Russia sanctions and maintains friendly relations with Russia, which is a member of the BRICS group of emerging economies.
Sberbank said transactions in rubles and rupees were going smoothly, with 90% of them being completed within a few hours – in stark contrast to other trading partners such as China.
Popov stressed that increased exports from India to Russia are helping to resolve the problem of rupee surplus for Russian companies, which was hampering bilateral trade in 2023 as the rupee was being used to pay for imports from India.
“The problem has been solved. There is no more rupee surplus,” Popov said, stressing that India needed to increase exports to Russia tenfold to achieve trade balance. An Indian source told Reuters on August 14 that the rupee surplus had fallen to “a few million dollars.”
He said India, the world’s fifth-largest economy, has almost everything that Russian importers are looking for.
“India is a huge self-sufficient economy and can meet its own needs. So, all the goods that Russia used to import can be bought in India,” Popov said.
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Sberbank has also expanded its hedging offerings, including futures and options, as well as offering rupee-denominated loans to Russian companies at interest rates significantly lower than in Russia.
He thanked Indian regulators for giving them the opportunity to operate through rupee-denominated “vostro” accounts that can be held by Indian banks on behalf of foreign banks, facilitating their operations.
Popov said the current system for converting rubles into rupees works well and does not require a third-party currency for settlement, but stressed that stock exchange transactions in rupees would increase transparency.
(Reporting by Elena Faulkhnaya and Gleb Bryansky; Editing by Guy Faulconbridge and David Evans)
