Punjab National Bank awaits instructions from the government on transactions with Russian entities
new Delhi:
The country’s second largest bank Punjab National Bank (PNB) has said that it is awaiting the advice of the Finance Ministry and 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 some European countries have barred some Russian banks from using SWIFT, a system used for global banking transactions.
PNB in a reply said, “…we have not received any advice from RBI/Ministry of Finance with regard to SWIFT related transactions with respect to Russia. Will.” For queries on transactions relating to Russia.
Meanwhile, sources said the State Bank of India (SBI) has stopped processing transactions of Russian entities that have been sanctioned by the West in the wake of Moscow’s invasion of Ukraine.
SBI is understood to have issued a circular as it fears that any transaction with the entities or sectors under sanction would invite sanctions on that as well. Russia is one of the largest suppliers of defense products and equipment to India, mostly under government-to-government contracts.
Bilateral trade between India and Russia stood at $9.4 billion so far this fiscal, from $8.1 billion in 2020-21.
Society for Worldwide Interbank Financial Telecommunication (SWIFT) is the world’s leading banking messaging service that connects approximately 11,000 banks and institutions in over 200 countries, including India.
Based in Belgium, the SWIFT system is considered central to the smooth functioning of global finance and Russia’s boycott from it will 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 equipment; Electrical machinery and equipment and fertilizers.
The major items exported from India to Russia include pharmaceutical products, electrical machinery and equipment, organic chemicals and vehicles.
In the past too, India had devised a mechanism to pay for imports from Iran when sanctions were imposed on the Persian Gulf nation.
The Russo-Ukraine war entered its 11th day on Sunday as fighting intensified in Ukraine’s capital Kyiv and other major cities.
Recently, the Group of Seven (G-7) major economies imposed punitive sanctions against the Russian central bank.
They also decided to remove Russian banks from the SWIFT inter-banking system – which aims to isolate Russia from global trade. India has so far maintained a neutral stand on Russia’s invasion of Ukraine and has asked both countries to resolve the issue diplomatically.
Removing banks from SWIFT is considered a severe restriction as almost all banks use this system. Russia is heavily dependent on the SWIFT system for its major oil and gas exports.