Indian banks are scrambling after bills for imports from Russia have started bouncing and payments for exports have been stuck in the wake of sanctions imposed by the west on Russia following its invasion of Ukraine.
"Due to the various sanctions the payment settlements have halted and that's a concern for banks right now. This has been shared by lenders with the central bank and the industry body," said a senior banking source involved in the discussions.
The Reserve Bank of India has met with select bankers and is trying to assess the exposure that lenders have to Russia and to Ukraine and the impact it may have on Indian banks, said another senior banking executive.
The extent of the payments that are stalled is not clear at the moment and the regulator is trying to assess it.
Russian exports to India stood at some $6.9 billion in 2021. Its exports to India include defense goods, mineral resources, fertilizers, metals and precious stones. India exported $3.33 billion worth of goods to Russia in 2021, mainly pharmaceutical products, tea and coffee.
India, which has deep trade and defense ties with Russia, is yet to criticise long-standing arms supplier Russia publicly over Ukraine and has instead urged both sides to cease hostilities, causing frustration among its other allies including the United States.
The Indian Banks' Association, an industry body, also met with select bankers on Monday to determine the impact of trade disruptions.
For now, bankers have not sought IBA's help in reaching out to the regulator or the government, the first source said.
RBI and IBA did not immediately respond to an email seeking comment.
Meanwhile, banks have started contacting corporate clients to understand their exposure to Russia and to Ukraine to see if their business could be significantly impacted, resulting in delayed loan re-payments for banks.
India's top lender, State Bank of India, along with several other banks have stopped processing any transactions involving Russian entities subject to international sanctions.