India’s state bank opening rupee accounts for trade with Russia

State Bank of India, the country’s largest lender, is opening special rupee accounts to handle Russia-related trade settlements in the local currency but is not the main bank for such business.

SBI is “making necessary arrangements and processing requests received from various banks, including Russian banks,” following guidelines laid out by the Reserve Bank of India, it said in a statement. The banking regulator had allowed Indian banks in July to open special rupee vostro accounts with lenders of other countries to settle overseas trades in the Indian currency. 

SBI clarified that the RBI had authorized all banks to open such special rupee vostro accounts. “SBI, as such, has not been identified as a nodal bank,” it said, in response to a media report that identified SBI as the main bank for trade with Russia. 

Even as the Indian regulator has allowed banks to deal with Russia freely, many with an overseas presence are increasingly nervous about western sanctions on their operations. They have sought assurances from the government that their businesses will be protected from sanctions when dealing with countries such as Russia.