Sberbank ready to renegotiate high transaction fee with Indian importers

livemint.com:

Mint. During the height of the Ukraine war, in July 2022, the Reserve Bank of India said that it would put in place an additional arrangement for invoicing, payment and settlement of exports and imports in rupees. The RBI’s move was aimed at promoting trade in rupees and to help ease settlements with Russia.

However, the move did not gain momentum as expected. The main issue was that both the Indian rupee and the Russian rouble are not fully convertible. Additionally, the volume of trade is skewed in favour of Russia, with India’s oil imports far higher than Russian imports.

Queries sent to the union ministry of petroleum and natural gas remained unanswered till press time. The ministry, in response to queries from a parliamentary standing committee, had noted that no crude oil imports by state-run oil companies were settled in Indian rupees in FY23. "Crude oil suppliers (including Abu Dhabi National Oil Company) continue to express their concern on the repatriation of funds in the preferred currency and also highlighted high transactional costs associated with conversion of funds along with exchange fluctuation risks," the ministry told the panel.

It added that suppliers expressed concern over the repatriation of funds in the preferred currency and highlighted the high transactional costs associated with conversion of funds along with exchange fluctuation risks. Ajay Sahai, Director General & CEO of the Federation of Indian Export Organisations, noted that although settlements are made in roubles, there is no direct exchange rate for rouble-to-rupee conversion. "In the case of payments made to India in rupees, there is not much of an issue - they (Russians) invoice and pay in rupees.