NEW DELHI: In a landmark deal signed by External Affairs Minister S Jaishankar and Russian Deputy Prime Minister Denis Manturov last week, both sides agreed to adopt the Russian financial messaging system — Service Bureau of Financial Messaging System of the Bank of Russia (SPFS) — for cross-border payments.
Another key element of the agreement signed on April 18 during Manturov’s visit to India, is to allow acceptance of Indian Ru-Pay cards and India’s Unified Payments Interface (UPI) in Russia, and the Russian MIR cards and its Fast Payments System (FPS) in India.
With this, the two countries will be able to resolve most of their pending payment issues. Top banking and finance officials from the two countries are working out the details to use these instruments to settle cross-border payments effectively. According to sources, India’s central bank — Reserve Bank of India — has set up a multi-disciplinary working group to implement it.
India and Russia have already agreed to settle payments through Special Rupee Vostro Accounts (SRVA). The April 18 pact clarified that Russia can use the surplus Indian rupees to conduct other businesses in India or remit back to Russia.
As for SPFS, it is a financial messaging system that works on the same lines as the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the international payment system used by thousands of financial institutions to transfer funds worldwide. After Russia invaded Ukraine, the EU and other Western countries removed top Russian banks from the SWIFT network. Russia had been asking India to use SPFS. It developed SPFS after it was threatened with expulsion from SWIFT when it annexed Crimea in 2014.