An Indian delegation visiting Russia may have prepared the ground for better relations between Indian and Russian banks wanting to write letter of credit (L/C) business.

While the top dozen or so Russian banks are known to their Indian counterparts, smaller banks often face hurdles, a senior Indian Banks' Association (IBA) official said.

Poor relations

The official said Indian banks tend not to accept Russian banks' guarantees, and it is difficult to establish the creditworthiness of Russian companies, most of which were set up in the nineties.

Meanwhile, a bank executive in the IBA delegation points to a lack of information about Russian banks that hinders L/C business.

"There is not much market information available about them. It creates hurdles for Indian banks to strike a deal with these Russian banks for accepting L/Cs and pursue other banking relations," he said.

Improvements sought

As a result of the delegations' visit, it seems as if relations between banks in India and Russia may improve. "After a meeting with industry bodies, Indian banks have decided to take up one bank at a time for detailed study," an IBA executive said.

If the Indian banks are satisfied with the financial standing of Russian banks, they should strike up relationships or look at areas where they can cooperate, he added.

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