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Russia Seeks Revival of LC

Published on May 06, 2022
Current Context: The government of Russia has asked the Indian government to revive the Letter of Credit.
Russia Seeks Revival of LC
  • Amid sanctions by most of the European countries, led by the United States of America, It has become difficult for Russia to carry out transactions as Russia has been banned from using SWIFT.
  • SWIFT stands for Society for World Interbank Financial telecommunications. This code is mandatory for carrying out international transactions. An 8 to 11-digit code is assigned which has to be verified on both ends. Following the ban from using the SWIFT network, Russia is finding it difficult to carry out transactions.
  • Russia has therefore asked India to use the letter of credit once in use decades ago, which comes with the guarantee of payment, despite any changes in the market structure. Indian and Russian central banks are working on this keeping in mind the sanctions imposed.
  • Indian exports will see a boost following the approval of the Letter of Credit. So far, India has exported 2.358 bn USD of goods and services this financial year, whereas imports from Russia have crossed 10 bn USD.

Question:

Q.1 Which country has asked India to revive the letter of credit mechanism following the SWIFT ban?
a. Russia
b. USSR
c. Iran
d. North Korea
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