India is preparing to push BRICS member states to expand the use of central bank digital currencies, or CBDCs, for cross-border payments, but it does not support creating a centralised payment system for the group, which could be seen as an attempt to challenge the role of the US dollar. Sources involved in the discussions said India, which holds the BRICS chairmanship this year, with Prime Minister Narendra Modi backing the approach of using CBDCs to settle trade transactions bilaterally between member states. However, there is a low likelihood that the BRICS leaders' summit, to be held in New Delhi this weekend, will reach an agreement on a joint payment and clearing system for the whole group. The option India has proposed is to link the CBDCs of member states' central banks for cross-border transactions, which could help reduce reliance on intermediary banks and lower transaction costs. At the same time, India also supports members using local currencies to settle payments for goods and services among themselves instead of third-country currencies. Randhir Jaiswal, spokesperson for India's Ministry of External Affairs, said it is too early to conclude the results of the discussions at the BRICS finance ministers and central bank governors meeting, which began on Wednesday, and that the official joint statement should be awaited. Meanwhile, Ivan Nosov, head of Sberbank in India, said that currently about 96% of trade between India and Russia is conducted through the existing rupee and ruble payment mechanism, while almost all trade between Russia and China is settled in yuan and rubles. India itself is in the process of piloting the digital rupee, while China and Russia are also testing their own CBDCs.
Sberbank's India head says ~96% of India-Russia trade already flows through the rupee-ruble mechanism, and India's push to expand local-currency/CBDC settlement would grow this business for Sberbank.
