The governments of India and Russia are exploring the integration of their payment systems as a way to counter the potential future effects of US sanctions on the capital flows between their countries. Specifically, the integration would involve India’s Rupay card system and Russia’s Mir Cards, allowing for seamless payments between the two nations. India and Russia held a high-level meeting to discuss this potential integration, with Indian External Affairs Minister Subrahmanyam Jaishankar and Russian Deputy Prime Minister Denis Manturov in attendance. The agreement includes exploring the acceptance of Mir Cards in India and Rupay in Russia to permit citizens of both countries to make cross-border payments using debit cards naturally.
One point of discussion at the meeting was the further exploration of integrating India’s payment stack, the Unified Payments Interface (UPI), and Russia’s Faster Payments System (FPS). India has been actively integrating its payment system with other countries, such as linking Singapore’s Paynow into its payment stack. The primary objective behind the exploration with Russia is to prepare for a potential extension of US sanctions that would cut the connection between the banking systems of India and Russia, making direct payments unfeasible. Although this possibility is projected into the future, some Indian companies have already been unable to collect payments linked to dividends of Russian oil companies due to past sanction enactments.
ONGC Videsh Ltd, Oil India, Bharat Petroleum Corp, and Indian Oil Corp are a few of the Indian companies that have had payments blocked due to the disconnection of Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system. The collaboration between Russia and India aims to prevent similar financial obstacles from developing in the future.
The potential integration of the Indian and Russian payment systems could minimize the adverse effects of US economic sanctions by reducing any interruption in trade between the two countries. This collaboration carries the potential to increase financial cooperation and investment between India and Russia, strengthening their bilateral relations. Also, the partnership supports the idea of promoting a multi-polar world, where the influence of dominant economies is balanced across smaller countries.
In conclusion, Russia and India see integration as a crucial factor in ensuring uninterrupted financial transactions between the two nations. It will be an essential step towards ensuring a smooth flow of economic activities between the two countries, irrespective of any economic sanctions that may be imposed in the future. However, there are still obstacles that the partnership faces, including infrastructure challenges and differences in regulations and financial systems. Nevertheless, it is an opportunity that both countries are actively considering and has the potential to improve their bilateral relationships in the long term.