Centre puts on hold plan to set up bank in Moscow
S Venkitachalam
NEW DELHI, January 20: The Union government has put on hold the proposal to set up a bank in Moscow by the State Bank of India in association with the Exim Bank and MMTC Ltd. Aimed at strengthening the banking and financial links between the two countries, the proposal has run into several problems including the insistence by Russians to provide jobs for local personnel.The proposal was agreed upon at the third meeting of the Indo-Russian working group on trade and economic cooperation held in Moscow from January 23-27, 1997. The Indian delegation was led by commerce secretary PP Prabhu. Subsequently, an Indian banking delegation visited Russia from January 30 to continue further discussions on setting up the proposed bank and other issues. The working group also recommended the establishment of a sub-group on financial and banking matters to the inter-governmental commission to provide an institutional mechanism for consultations on such matters.The proposal also figured during the Indo-Russian working
group on trade and economic cooperation which concluded its two-day session in Delhi in December. The Russian side assured to provide all necessary assistance to facilitate early opening of subsidiaries of Indian banks in Russia as agreed upon between the two countries. India held out a similar assurance in respect of branch operations of Russian banks in India. In this context, both sides agreed on the urgent need to strengthen banking links between the two countries as it would help such institutions to get acquainted with the banking practices and procedures in each other's countries and would ease and facilitate issue of the acceptance of bank guarantees, stimulating bilateral trade. Both sides noted with satisfaction the reversal of the declining trend of the bilateral trade noticed during 1996-97 and observed that the trade turnover had increased by 5 per cent during April-September 1997. However, it was way below the potential and needed to be further accelerated through pro-active policies such asbroad-basing the trade basket and long-term trading arrangements. It was felt that engineering goods and other hi-tech items such as electronic goods or information technology products and computer software in particular had a good potential to enhance bilateral trade. The State Trading Corporation (STC), MMTC Ltd and Projects and Equipment Corporation would act as the nodal agencies for interacting with the respective organisations from the Russian side in this regard. The Indian side highlighted the need for an early agreement on setting up of consignment export against rupee debt to obviate delays in terms of time taken in transportation of goods and also to respond quickly to the needs of Russian buyers. India felt that this would be a very effective way of preventing switch trade, encouraging supply of quality and diversified goods from India and also help in attracting reputed Indian exporters with longer term business interest with Russia.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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