India to seek alternative to SWIFT as West cuts off Russia from global interbank platform

India has its own Structured Financial Messaging System (SFMS) for a secure messaging standard for financial messaging globally for intra/interbank applications. It is similar to SWIFT (Society for World-wide Interbank Financial Telecommunications). As per a Parliamentary Committee suggestion last year, India must develop an indigenous payment system similar to SWIFT.

Even as the western nations announced over the weekend that they will cut off Russian Banks from SWIFT, India is looking at an opportunity to develop its own indigenous systems for intrabank transnational payments.

India has its own Structured Financial Messaging System (SFMS) for a secure messaging standard for financial messaging globally for intra/interbank applications. It is similar to SWIFT (Society for World-wide Interbank Financial Telecommunications).

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As per a Parliamentary Committee suggestion last year, India must develop an indigenous payment system similar to SWIFT. This will protect the financial data of millions of transactors and boost the Indian economy.

Also read| US, Europe allies expel Russian banks from SWIFT in a dramatic escalation to isolate Putin

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“The Committee observes that data protection in the financial sector is a matter of genuine concern worldwide, particularly when through the SWIFT network, privacy has been compromised widely. Indian citizens are engaged in huge cross-border payments using the same network,” as per a report by the committee reviewed by the Economic Times (ET).

SWIFT was founded in 1973 and is based in Belgium. Its platform connects over 11,000 banking and securities organisations and customers across 2002 countries.

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Russia has been internally using SPFS (English- System for Transfer of Financial Messages) which was developed in 2014 by the Bank of Moscow.

Iran and North Korea have already been totally cut-off from SWIFT.

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China has been using the Cross-Border Interbank Payment System (CIPS) payment system for settlements in international Renminbi payments. It was developed in 2015.

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India’s SFMS was launched in 2001 at Institute for Development and Research in Banking Technology (IRDBT).

India had already entered into a Rupee-Ruble trade agreement with Russia to remain secure from Russian sanctions from the US and west. The deal for 5 S-400 Triumf air defence systems (which is worth around USD5.2 billion) has been done in Rupees.

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The rupee-rouble trade is expected for a boost as Russia becomes more trade dependent on countries such as China and India for imports.

Indo-Russian bilateral trade in Rupee-Ruble denomination increased under PM Modi’s tenure by five-fold from 6 percent to 30 percent of the total bilateral trade between 2014 to 2019.  

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