MUMBAI: Indian bankers expect SWIFT to implement the ban on Russian banks from Wednesday following a communication from European authorities.
However, they feel that selective exemptions that are being talked about would be a challenge to implement and the ban is likely to be total, resulting in a major disruption for trade. “We have been hearing in the news that a few banks that deal with gas transactions would be exempt. It is not clear how the ban will work then,” said a banker. He added that the immediate impact would be a major jolt to trade.
The expulsion of Russia from the global messaging platform was announced by European and US authorities. However, the operation of the ban was yet to be announced by SWIFT, which is a cooperative of global banks.
An expulsion from SWIFT is expected to bring Russian trade to a halt as most transactions take place through dollars, euros or pounds. This would mean one leg of the transaction would go through global markets in the US or Europe and the moment the money lands in the correspondent account of a Russian bank, it will not move from there.
In theory, bankers say Indian and Russian banks can transact in roubles using the SWIFT messaging system as software. However, there is no mechanism for a rupee-rouble settlement at present. Bankers anticipate that the government and the RBI will work to create a rupee-rouble trade arrangement.