Govt authorises SBI to promote rupee trade with Russia

Exporters’ body Federation of Indian Export Organisations (FIEO) has said that India has decided to authorise the State Bank of India (SBI) to promote rupee trade with Russia and soon Moscow will name its bank to operationalise the mechanism.

This decision comes as lately a large part of bilateral trade is getting settled between India and Russia in rupee due to the US and Europe’s sanctions following Moscow’s attack on Ukraine. SBI is equipped with doing business in rupee with Russia, but Moscow has to identify one bank.

In July, the RBI issued a detailed circular asking banks to put in place additional arrangements for export and import transactions in Indian rupees in view of increasing interest of the global trading community in the domestic currency. For settlement of trade transactions, the central bank had said that the concerned banks will require special rupee vostro accounts of correspondent bank/s of the partner trading country.

FIEO President A Sakthivel said, “So the SBI is already identified here...We have a good rupee payment mechanism in Iran, so same thing will happen (with Russia) SBI is a huge bank to cater the need of exporters. Once the mechanism comes into play, we do not want to bother about the foreign currency fluctuations. Indian rupee will speak for itself. I think very soon it will happen.”

FIEO has demanded from the government that rupee trade should be entitled for benefits currently available for trade in major currencies. In 2021-22, India’s exports to Russia stood at $3.25 billion, while imports aggregated at about $10 billion.