The Reserve Bank of India (RBI) has led a team of domestic banks to Russia. The just concluded first-of-its-kind exercise aims at giving a fillip to sagging Indo-Russian trade. The objective was also to lend comfort to the Indian banking community about its counterpart in Russia.
"Unless the Indian banks are comfortable with the Russian banks, the bilateral trade deals cannot take off in a big way. A couple of Russian banks went under in the late '90s increasing the discomfort of Indian banks in dealing with them. This was one exercise to build relationships," a source said.
RBI executive director K J Udeshi led senior officials from a string of banks including Bank of Baroda, Union Bank and Oriental Bank of Commerce. The lone private bank in the delegation was ICICI Bank.
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SBI and Canara Bank have already received clearance for their application to open a bank in Moscow -- Commercial Bank of India. The bank, which will commence operations shortly, targets wholesale banking and trade finance operations. It will at a later date examine retail banking.
Through this RBI-led delegation, the Centre is keen to see more Indian banks setting up base in that region in order to enhance the trade between the two countries.
India and Russia have a long-term strategic partnership, whereby most of India's infrastructure and industrial capacity -- ranging from steel mills to power plants and defense equipment -- were built in the 1950s and 1960s with Soviet cooperation.
Many in Russia see India as a significant and valuable market that will help the revival of Russian industry and its defense enterprises.
Of the $80 billion-odd loans made by the erstwhile Soviet Union to various countries, India is the only debtor that makes regular payments back to the Russian Federation. Trade turnover between traditional Indian and Russian products, now stands at $1.2 billion.
Viewed alongside $1.15 billion coming to Russia over 18 months under the World Bank and Japanese Exim Bank loan programmes, the importance of this relationship is self-evident.
The rupee debt owed to Russia has decreased considerably, and today stands at Rs 1,600 crore, against Rs 2,350 crore in the beginning of 1999.