Banks launch transfers in Indian rupees

Russian banks continue to set up international settlement business at the expense of friendly currencies. This month, outgoing transfers in rupees became available to Tinkoff Bank customers. Of the systemically important banks, several banks already provide such services. However, on the part of the market, there is rather a request to create a reverse route: transfers of rupees from India with subsequent conversion into rubles in Russian accounts.

Tinkoff Bank announced the launch of outgoing transfers in Indian rupees. The service is available to both retail and corporate clients. The commission for legal entities is 0.15–0.2%, for individuals – 1.5 thousand rupees (slightly more than 1.5 thousand rubles). There are no limits on the transfer amount. “Tinkoff has several partner banks in India with which the bank works directly and makes transfers in rupees. The work on opening accounts took several months,” the bank explained.

Transfers to India are also available at other major banks. VTB in December 2022 announced the launch of transfers in rupees for small and medium-sized businesses (SMEs). The bank clarified that “since the beginning of 2023, the number and volume of payments in Indian rupees have increased tenfold.” The presence of a branch in India, VTB added, “enabled the use of Indian rupees more actively for payments under import-export contracts.” In early June, FC Otkritie (owned by VTB) also announced the launch of transfers in rupees. Alfa-Bank claims that it has “long ago” launched settlements with India in both rupees and rubles (for individuals, individual entrepreneurs and legal entities). Sberbank customers can transfer funds to India in Russian rubles. “This opportunity has appeared quite recently, but we are already seeing demand from customers,” the bank (it also has a branch in India) explains.

Tinkoff Bank sees “great demand for outgoing transfers from clients – legal entities engaged in industries such as the textile, food and pharmaceutical industries.” In addition, the bank expects an increase in demand for transfers from individuals.

“Russian banks are actively involved in the search for new counterparties in foreign markets, including India. This is due to the ongoing change in the structure of Russia’s foreign economic activity, the reorientation of trade and payment flows and the transition to settlements in national currencies,” the Central Bank notes.

The launch of new currency settlements takes place against the backdrop of squeezing dollars and euros out of the market. For example, Raiffeisenbank, in addition to introducing a 50% commission for crediting dollars to retail clients, has limited payments in euros to banks in the Russian Federation and 12 other countries since July 3.

At the same time, the rupee cannot be called a popular currency, its share in world settlements does not exceed 1%, Aton analysts noted at the beginning of this year, and all foreign exchange transactions carried out in the country require permission from the Reserve Bank of India (RBI). “There is no technical problem for transfers to India, if there are interbank relations and relatively simple IT integration. The problem is that Russian companies have accumulated a lot of rupees against the backdrop of a trade imbalance with India,” says Viktor Dostov, head of the Association of Electronic Money Market Participants and Money Transfers. RIA Novosti, citing the Ministry of Trade and Industry of India, wrote that the volume of Russian exports to the country for the four months of 2023 reached $20.5 billion, while imports amounted to only $1.3 billion.

There is nothing special to spend the rupees received in India on, and converting them into hard currencies and even into rubles, the RBI “does not allow for economic and sanctions reasons,” Mr. Dostov explains. “Therefore, a reverse mechanism for transferring rupees from India with subsequent conversion into rubles in Russian accounts would be additionally interesting,” he concludes.

But bank accounts should bring good income. “The international settlement business has historically been more marginal than the domestic one,” Viktor Dostov explains. “In this situation, when there are no simple channels for transferring currency even from Russia to Russia, commissions have grown, in some cases we are talking about double-digit growth.”

Olga Sherunkova