India Permits Opening of “Vostro” Rupee-Ruble Bank Accounts To Assist Russia Trade
India’s central bank has allowed HDFC Bank Ltd (HDBK.NS) and Canara Bank Ltd (CNBK.NS) to open a special “Vostro account” for trade in rupees with Russia. Vostro accounts are held by a bank on behalf of another, often foreign bank, and this forms a key part of correspondent banking.
India’s Central Bank, the Reserve Bank of India (RBI) introduced a new mechanism in July this year for international trade settlements in rupees, aiming to promote exports and facilitate imports.
The measure was seen as aiding business ties with Russia to circumnavigate Western sanctions against Moscow concerning its conflict with Ukraine. Indian trade secretary Sunil Barthwal earlier this month said the country has given nine banks approval to open “Vostro” accounts to help facilitate trade in rupees with Russia.
Russian energy major Gazprom (GAZP.MM) had opened an account with UCO Bank (UCBK.NS), while VTB Bank (VTBR.MM) and SberBank (SBER.MM) have opened accounts with their own India-based branch offices.
India’s trade with Russia is growing, lead mainly by the energy sector but now spreading into other trade sectors as well. India is also currently negotiating a Free Trade Agreement with the Eurasian Economic Union. Russian businesses interested in establishing a presence in India may contact Maria Kotova of Dezan Shira & Associates at india@dezshira.com. The firm has offices in Delhi, Mumbai, and Chennai.
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During these uncertain times and with sanctions in place, our firm helps Russian companies relocate to Asia. We also provide financial and sanctions compliance services to foreign companies operating in Russia. Additionally, we offer market research and advisory services to foreign exporters interested in doing business in Russia as the economy looks to replace Western-sourced products. For assistance please email russia@dezshira.com or visit www.dezshira.com
