9 Russian banks to set up vostro accounts

Three months after the Reserve Bank of India allowed trade settlement in Indian rupees, the Union government has given approval to nine banks to open special Vostro accounts. Out of the nine, three have opened accounts, which are Gazprombank with UCO Bank (Kolkata), VTB and Sberbank with their own branch offices, according to a senior government official.

The move will facilitate India’s exports to sanction-hit Russia, which reported a 24% decline in the April-August period. The RBI-designed mechanism only entails trade in the Indian rupee, eliminating exchange risks.

Queries emailed to the UCO Bank, Sberbank, Gazprombank, VTB, and IndusInd Bank on Tuesday remained unanswered till press time.

To facilitate trade through this route, the government, through an amendment in the foreign trade policy last week, allowed exporters to avail of incentives or duty rebates for settling trade in rupee terms. The move was aimed at encouraging exporters to boost shipments to countries like Russia. Immediately after the Russia-Ukraine war broke out in February, payments became a pain point for exporters, especially after Russia was cut off from the SWIFT payment gateway. “Nine accounts have been opened. One in Uco Bank, one in Sber, one in VTB and 6 with IndusInd Bank. These six are different Russian banks,” commerce secretary Sunil Barthwal said at a press briefing.