India Permits Opening of “Vostro” Rupee-Ruble Bank Accounts To Assist Russia Trade

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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 The firm has offices in Delhi, Mumbai, and Chennai.

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During these uncertain times, we must stress that our firm does not approve of the Ukraine conflict. We do not entertain business with sanctioned Russian companies or individuals. However, we are well aware of the new emerging supply chains, can advise on strategic analysis and new logistics corridors, and may assist in non-sanctioned areas. We can help, for example, Russian companies develop operations throughout Asia, including banking advisory services, and trade compliance issues, and have done since 1992.

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