Sberbank Sees Big Opportunity For Cbdcs In India-Russia Trade Settlements

(MENAFN- Live Mint) Russia's largest lender Sberbank sees significant potential for central bank digital currencies (CBDCs) to facilitate bilateral trade settlements with India, Herman Gref, CEO and chairman of the executive board of Sberbank, said on Friday. The central banks of the two countries are working on a mechanism that could make cross-border payments faster and more efficient, he added.

“Now is only the beginning. We see a huge opportunity for digital currency for all settlements between the countries,” Gref said during a media briefing on the sidelines of the BRICS summit in New Delhi. He said trade settlement through digital currencies was more efficient and that digital currencies would see greater demand and faster growth.

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“The Russian central bank and the central bank of India are working on this very precisely and we have tried to support them because we need this kind of instrument,” Gref said.

Quick answers to key questions

.5 QUESTIONS1How can CBDCs improve trade settlements between India and Russia?⌵

Central bank digital currencies (CBDCs) can enhance trade settlements by making cross-border payments faster and more efficient, addressing the challenges faced in traditional payment systems like SWIFT.

2What is the significance of Sberbank's comments about digital currencies?⌵

Sberbank's CEO highlighted the significant potential of CBDCs in facilitating trade between India and Russia, emphasizing that digital currencies are expected to see greater demand and accelerated growth.

3Why is India-Russia trade increasing rapidly?⌵

The trade has expanded sharply due to India's increased imports of discounted Russian crude oil and other commodities, which account for the majority of the bilateral trade, currently standing at about $60 billion.

4What role does Sberbank aim to play in India-Russia business relations?⌵

Sberbank seeks to act as a bridge for Russian companies entering India and for Indian businesses aiming to expand into Russia, facilitating greater economic engagement between the two nations.

5How does Sberbank plan to address past challenges with surplus Indian rupees?⌵

Sberbank has indicated that the issue of surplus Indian rupees is no longer significant and is now utilizing this liquidity effectively, supporting its operations and investments in Indian government securities.

The comments come as India and Russia seek to improve ways of settling their expanding bilateral trade. BRICS countries have also been working towards greater connectivity between their payment systems, which could potentially reduce dependence on traditional cross-border payment infrastructure such as the SWIFT network. The issue gained prominence after major Russian banks were cut off from SWIFT following Russia's invasion of Ukraine in 2022.

Russia began rolling out its central bank digital currency, the digital ruble, through systemically significant banks, including state-controlled Sberbank, on 1 September. India launched its digital currency pilot in 2022.

Gref also said the problem of surplus Indian rupees that Sberbank had faced in the previous year was no longer significant. The bank has been using surplus rupee liquidity to support its operations, including through investments in Indian government securities.“Our system is now working more efficiently than before. Last year, we had a problem of surplus rupee, but there is no such issue this year,” he said.

The comments are significant as Indian rupee balances accumulated by Russian entities in vostro accounts had emerged as a challenge in bilateral trade settlements. Vostro accounts are maintained by foreign banks with Indian lenders to facilitate transactions in the rupee. Sberbank's latest comments indicate that the lender is now able to deploy such liquidity more effectively.

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Sberbank is simultaneously looking to significantly expand its presence in India. The lender has sought 10 branch licences from the Reserve Bank of India to open branches across 10 cities and is awaiting regulatory approval, Gref said.

The bank currently operates in India through branches in New Delhi and Mumbai. Asked whether Sberbank plans to convert its Indian operations into a wholly owned subsidiary, Gref said:“There is no immediate plan.”

Alongside thisbranch expansion, Sberbank is establishing a larger business presence in the national capital. The lender has acquired two office buildings in New Delhi that are under construction and are expected to be commissioned by 2028. The complex, with a total area of 48,000 square metres, will house Sberbank's headquarters as well as a business centre for Russian and Indian companies seeking to expand bilateral business.

The project is the largest Russian investment in India's commercial real estate market, according to Sberbank. The bank said the facility would create a platform for companies from both countries to develop business cooperation.

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Sberbank is also developing a digital ecosystem to connect Indian and Russian businesses. It has announced an information technology platform, developed with major Indian companies, that will provide Indian businesses with information on opportunities in the Russian market, regulatory frameworks and potential partners.

The bank is seeking to increase Indian exports to Russia and narrow what Gref described as a roughly $50 billion trade imbalance in Russia's favour. Sberbank expects to service more than 15% of total trade turnover between the two countries by the end of this year.

India and Russia are working towards a target of $100 billion in bilateral trade and $50 billion in two-way investment by 2030. Bilateral trade currently stands at about $60 billion, according to figures cited at the briefing.

Gref said Sberbank also sees opportunities for partnerships with India in financial services, technology, education and healthcare. The bank is interested in finding partners for high-technology projects as well as participating in large-scale infrastructure projects in India.

Sberbank has also recently launched a product allowing its account holders to invest in Nifty 50 stocks, Gref said. The lender said it has been developing its financial business in India for 16 years and serves tens of thousands of corporate clients in the India-Russia business corridor. Sberbank said its business in India has grown at least tenfold over the past five years.

Bridging the gap

Gref said the bank seeks to act as a bridge for Russian companies and investors entering India and for Indian businesses looking to expand into Russia, while building financial and technological infrastructure to support greater economic engagement between the two countries.

India-Russia bilateral merchandise trade has expanded sharply in recent years, reaching nearly $60 billion in FY 2025-26 (and a record high of about $68.7 billion in FY 2024-25), a more than fourfold increase from roughly $13 billion in FY 2021-22, according to statements by external affairs minister S. Jaishankar and commerce ministry data.

The surge has been driven overwhelmingly by India's imports of discounted Russian crude oil and petroleum products (accounting for over 80% of inflows and totaling around $55 billion in the latest full year), alongside fertilizers, coal, and other commodities, while Indian exports to Russia-primarily pharmaceuticals, chemicals, engineering goods, marine products, and tea-remain far smaller at about $4-5 billion.

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