Indian Banks Suggest US Treasury Route Advisories via Finance Ministry for Quick Implementation

Indian banks have proposed that advisories from the US Treasury be routed through the finance ministry for faster implementation, according to sources familiar with the matter.

Executives from top banks, including State Bank of India, Punjab National Bank, and Canara Bank, recently met with a six-member US Treasury delegation. The discussions focused on Russian payments and the potential breach of the $60 per barrel price cap on Russian crude oil.

Currently, the US authorities send advisories directly to banks using the SWIFT system for international fund transfers. The US Office of Foreign Assets Control (OFAC) often routes these communications through correspondent banks.

“These issues are sensitive, and we often receive direct advisories that require more clarification,” said a senior bank executive involved in the discussions. “It would be best if the finance ministry is involved to provide clarifications, especially since these advisories can involve penal charges or other violations.”

Another bank executive mentioned that the round table with US Treasury officials was organized at the request of the external affairs ministry. “A major concern was the possible evasion of the Russian oil price cap. We assured them that all Indian banks follow the guidelines issued by the Reserve Bank of India and that such transactions are monitored by relevant authorities,” he said.

The G7 countries and their allies have banned tanker operators, insurers, and other service firms from helping with Russian crude exports if the price exceeds $60 per barrel.

S&P Global Commodities data shows that non-price-capped tankers have a larger market share in shipping Russia’s Pacific crude exports. During his visit to India in April, US Treasury Assistant Secretary for Economic Policy Eric Van Nostrand said they are focusing on strategies to complicate Russia’s evasion of the price cap.