People who passed HDFC Bank in Kolkata, India on August 19, 2021. It was HDFC Bank, India’s largest private financial institution, that Indian cement makers recently used to buy Russian coal. Of the kind of trade that could blunt western sanctions on Moscow.
Indra Nil Aditya | Nurphoto | Getty Images
According to Reuters and sources, Indian cement makers recently used the yuan to buy Russian coal at HDFC Bank, India’s largest private lender, which could slow Western sanctions on Moscow. Details of a trade have been revealed.
There is no suggestion that a purchase whose details have not been previously reported violates the sanctions imposed on Russia as a result of the invasion of Ukraine.
However, this document shows one way Russia can continue to sell goods abroad without paying in US dollars, despite restrictions aimed at freezing from financial markets.
According to the invoice dated June 5 and sources familiar with the issue, HDFC Bank Backing cement manufacturer Ultratech Purchase of Russian coal from producer and trader SUEK for 172.7 million yuan ($ 25.74 million).
According to the invoice, the letter of credit for this transaction was issued by HDFC Bank’s Andeli East suburban branch of Mumbai.
The dollar is the best currency for global trade in raw materials, but some traders say the yuan could be increasingly used to settle payments for supplies from Russia.
In the invoice, SUEK requires Ultratech to transfer 172.7 million yuan to SUEK’s account at the Shanghai branch. China Everbright Bank.. SUEK lists the Hong Kong branch of international lenders HSBC As a correspondent bank.
Correspondent banks act as an intermediary for remittances from one bank to another. Reuters could not determine if China Everbright received the payment or if HSBC or another bank was involved in the transfer of funds.
HDFC Bank and HSBC declined to comment. Ultratech, SUEK and China Everbright did not respond to requests for comment.
It was not clear from the invoice which currency was used to pay the yuan. The amounts listed are estimated in RMB, and Reuters reported last week that Ultratech had agreed to import 157,000 tonnes of coal from SUEK registered in Switzerland and settle final payments in that currency. Did.Read the full text
RMB transactions are still rare
In the case of India, such payment methods may become more common as they seek to maintain trade relations with Russia for commodities such as oil and coal without the risk of violating Western sanctions.
India has deep political and security ties with Russia and refrains from condemning the Ukraine War, which Russia calls a “special military operation.”
India’s energy imports from Russia have surged recently as traders unable to sell to many western markets offered significant discounts.
New Delhi defended the purchase of Russian goods, saying they were legal and a sudden outage would raise prices further and hurt consumers.
More use of the yuan to settle payments could help isolate Moscow from punishment, further internationalize the yuan, and strengthen Beijing’s promotion to break the US dollar’s dominance in world trade.
However, it is still rare for Indian companies to agree to settle transactions in RMB with companies outside of China. In the absence of sanctions, overseas payments to Russian commodities and energy companies are usually made in dollars to the Russian account via the SWIFT.
In the case of RMB-based Indian trade settlement, lenders may send dollars to a foreign bank with sufficient RMB reserves or an affiliated Chinese bank instead of closing the transaction in RMB. I have.
The invoice included the SWIFT transaction IDs of both HSBC’s Hong Kong branch and China Everbright’s Shanghai branch. Reuters was unable to determine if payments were made using the SWIFT platform.
SWIFT is a secure messaging system that facilitates rapid cross-border payments and facilitates the flow of international trade. In recent months, several Russian banks have been disconnected from the system.
“As a matter of policy, SWIFT has not commented on the flow between institutions,” a spokesman said.
India’s bilateral trade with China is largely paid by businesses in dollars, even after the deadly military border clash between the two in 2020 and heightened tensions that have not yet subsided. Prospered.
New Delhi has tightened scrutiny of China’s investment and imports and banned some mobile apps due to security concerns.
The Indian government and the central bank were aware of the potential payment of Russian cargo in the Chinese yuan, sources told Reuters last week. The government and the central bank did not comment on this article.
