Rupee trade with Russia yet to take off

NEW DELHI: No transactions have taken place so far in the Vostro accounts that the Russian banks have opened in local branches in India for rupee trade, officials from the Ministry of Commerce and Industry told TNIE. So far only accounts have been opened, it takes time to start making transactions through those accounts, said the official.

“This decision was taken very recently. There is a series of processes involved -- banks have to open Vostro accounts, RBI has to issue certain guidelines. Importers will have to put money into these trade accounts, and then only they can set it off against their imports,” the official said.

According to the Ministry of Commerce and Industry, nine banks have been given approval so far to open Vostro accounts for rupee trade with Russia. Gazprom has opened an account with UCO Bank, VTB Bank and SBER Bank have opened Vostro accounts with their own branch offices in India while six other banks have opened accounts with IndusInd Bank.

The official expressed hope that transactions would start soon. “We are hopeful that with RBI guidelines, our (Commerce Ministry) guidelines and DFS (department of financial services) guidelines, soon there would be transactions through those accounts,” said the official. On the question of larger banks not coming forward to open rupee trade accounts for Indo-Russia trade, the official admitted that banks with high exposure to dollar trade do not want to risk any sanctions from the US and hence they are reluctant to open rupee trade accounts with Russian banks.

According to officials, sanctions on Russian banks by the international community also make it difficult for Russian exporters to repatriate money from Indian trade accounts.