UCO Bank, used by India for Iranian payments, plans to swap rupees with Russia
India’s state-owned bank UCO will soon open a special rupee account with Russian bank Gazprom to facilitate the growth of trade between the two countries, a senior official said.
The bank has received the necessary approval from the regulator – the Reserve Bank of India – to open a rupee vostro special account, Soma Sankara Prasad, managing director and managing director of UCO Bank, told Bloomberg News in an interview. telephone.
UCO Bank has in the past operated as a payment bank for oil imports from sanctions-stricken Iran. On the other hand, Gazprombank has so far been spared the tougher sanctions Russia has faced for its invasion of Ukraine.
UCO Bank will put in place operational arrangements before opening the account with the Russian counterpart, Prasad said, adding that there is no clear timeline on when transactions can begin.
Trade between India and Russia has flourished in recent months, despite the threat of sanctions due to the war in Ukraine. Total imports of items such as sunflower oil, fertilizer, money, printed books, coriander seeds and furniture jumped more than 61% in the April-July period for hit $2.1 billion, up from $1.3 billion a year earlier, the Mint newspaper reported, citing Commerce Department data.
Crude, however, continued to dominate bilateral trade and increased more than fivefold to $13.3 billion from $2.6 billion a year earlier.
In July, the RBI authorized Indian banks to open special rupee vostro accounts with lenders in other countries to settle overseas transactions in Indian currency. A Vostro account is created to allow a foreign lender to act as an agent or provide services as an intermediary for a home country bank to execute wire transfers, withdrawals and deposits for the customers.
The Kolkata-based bank has received around 14 to 15 requests from banks in different countries for opening vostro special accounts under the RBI circular.
“This facility will comply with RBI regulations and only for non-sanctioned banks,” Prasad said.
Earlier this month, the State Bank of India, the country’s largest lender, announced it was opening special rupee accounts to handle Russia-related trade settlements in the local currency, but is not the main bank for this type of activity.