Both sides are discussing accepting RuPay and MIR Cards within national payment infrastructures
NEW DELHI/MUMBAI : Russia, many of whose banks have been cut off from the Swift financial network, is exploring opening alternative payment channels with India, including linking Unified Payments Interface (UPI) with the Faster Payments System (FPS) of the Bank of Russia, to continue cross-border trade.
According to Dmitry A. Solodov, a spokesperson for the Russian embassy in New Delhi, his government has also asked Indian lenders to connect to the financial messaging system of the Bank of Russia to facilitate interbank transactions. In addition, the two sides are discussing accepting RuPay and MIR Cards within national payment infrastructures, Solodov said in an emailed statement.
“All these options are on the table and are being discussed by the two governments, the Reserve Bank of India and the Bank of Russia,” said a senior Indian government official, requesting anonymity.
Establishing alternative mechanisms will allow cross-border financial transfers between the two countries at a time large Russian banks have been cut off from the Swift network. Although bilateral trade with Russia stood at $8.1 billion in FY21 or less than 1.5% of India’s total, the country is heavily dependent on Russia for crucial defence equipment and parts. In addition, payments worth $500 million due to Indian exporters for goods shipped to Moscow remain stuck because of Western sanctions on Russia.
Experts said fast payments have only been used for retail transactions. “In cross-border payments, money has to move between nations and involves counterparty risk. Linking the fast payments network of two countries allows citizens of one nation to use their payments system in another country and vice versa,” said Madhusudanan R., co-founder and chief executive of M2P Fintech.
With global card networks such as Visa, Mastercard and Amerian Express boycotting Russia, India’s RuPay Card network, run by the National Payments Corp. of India (NPCI), can be used as an alternative to allow people to transact. MIR card is a Russian government-sponsored card for local payments.
“Disconnecting Russian banks from Swift cannot stop our bilateral trade and bring it to zero. The relevant Russian and Indian ministries and financial organizations are in continuing dialogue on accepting RuPay and MIR Cards within national payment infrastructures, as well as on the interaction of the unified payments interface and the Faster Payments System of the Bank of Russia. The Russian side invited Indian credit institutions to connect to the financial messaging system of Bank of Russia to facilitate faultless interbank transactions,” Solodov said in his email…. Read More (mint)