UCO Bank Managing Director and Chief Executive Officer Soma Shankar Prasad told Bloomberg News in a phone interview that the bank has received the necessary approval from the regulator – Reserve Bank of India, to open a special Rupee Vostro account.
UCO Bank has in the past acted as a payment bank for oil imports from sanctions-hit Iran. Gazprombank, on the other hand, has so far been shielded from harsh sanctions faced by Russia for its invasion of Ukraine.
UCO Bank will put in place the operational modalities before opening an account with the Russian counterpart, Prasad said, adding that there is no clear time frame on when the transaction can start.
Despite the threat of sanctions due to the war in Ukraine, trade between India and Russia has flourished in the past few months. Mint newspaper reported that total imports of sunflower oil, fertilisers, silver, printed books, coriander seeds and furniture items rose more than 61% to $2.1 billion during the April-July period, from $1.3 billion a year earlier. . commerce ministry statistics
However, crude oil continued to dominate bilateral trade, growing five-fold to $13.3 billion from $2.6 billion a year ago.
In July, the RBI allowed Indian banks to open special Rupee Vostro accounts with lenders from other countries to settle foreign trades in Indian currency. A Vostro account is set up to allow a foreign lender to act as an agent or to provide services as an intermediary for a bank to execute wire transfers, withdrawals and deposits for customers.
The Kolkata-based bank has received around 14-15 applications from banks in different countries for opening special Vostro accounts under the RBI circular.
Prasad said, “This facility will be as per the regulation of RBI and will be available only for non-approved banks.
Earlier this month, state Bank of IndiaThe country’s largest lender said it was opening special rupee accounts to handle trade settlements involving Russia in the local currency, but not the main bank for such business.