Indian banks have struggled after bills for imports from Russia began surging and payments for exports stalled under sanctions imposed by the West on Russia after its invasion of Ukraine.
“Due to various sanctions, payment processing has stopped and that is a concern of the banks at the moment. This was communicated by the central bank lenders and the industry body,” said a senior banking source involved in the discussions.
The Reserve Bank of India has met with select bankers and is trying to assess lender exposure to Russia and Ukraine and the impact this could have on Indian banks, another senior bank executive said.
The extent of the stalled payments is not clear at this time and the regulator is trying to estimate it.
Russian exports to India in 2021 were around $6.9 billion. Exports to India include defense goods, mineral resources, fertilizers, metals and precious stones. India exported $3.33 billion worth of goods to Russia in 2021, mostly pharmaceuticals, tea and coffee.
India, which has close trade and defense ties with Russia, has yet to publicly criticize longtime arms supplier Russia over Ukraine and has instead urged both sides to cease hostilities, prompting frustration among its other allies, including the United States.
The Indian Banks’ Association, an industry body, also met with select bankers on Monday to assess the impact of trade disruptions.
So far, bankers have not enlisted the IBA’s help to approach the regulator or the government, the first source said.
The RBI and IBA did not immediately respond to an email seeking comment.
Meanwhile, banks have started contacting corporate clients to understand their exposure to Russia and Ukraine to see if their business could be materially impacted, which could result in delayed loan repayments for banks.
India’s largest lender, the State Bank of India, along with several other banks, has halted transactions involving Russian companies subject to international sanctions.