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India is hastening its efforts to set up an alternative payment system to carry out its trade with Russia, which is hit with stringent western sanctions following its invasion of Ukraine, reported Hindustan Times.
The country is currently in the process of picking a potential bank to facilitate its trade ties with Russia, an official aware of the development told the publication.
The official did not divulge the name of the bank being considered for the alternate payment system. He said that discussions were held between representatives of the Reserve Bank of India, SBI, and UCO Bank.
This move comes after the country’s government was urged by a top interministerial panel to prioritise edible oil and fertiliser imports from Russia, and the payments owed to the country.
Led by economic affairs secretary Ajay Seth, the panel is looking into the impacts of various western sanctions announced on Russia on the Indian economy.
Ministries of commerce, food and consumer affairs, fertilisers, external affairs and petroleum are also part of the panel.
According to the source, the government would prioritise imports of edible oil and fertiliser as shortage of these commodities could result in food inflation and disrupt the country’s farming sector.
India is a net importer of both edible oil and fertilisers.
Earlier this month, a report by Bloomberg Quint said that India is considering an alternative payment route following the expulsion of Russian banks from the international payment network SWIFT.
The country is said to consider a system it had previously put in place to streamline payments to Iran when US sanctions blocked Iran from engaging in bilateral trade with India.
At the time, Kolkata-based UCO bank as assigned as a so-called ‘vostro account’, enabling Indian importers to buy oil from Iran using Indian rupee.