UCO Bank back in focus as India-Russia trade expands

27 Sep 2022 , 07:19 AM

According to Soma Sankara Prasad, Managing Director, and Chief Executive Officer of UCO Bank, who talked to ET, the bank has got the required authorization from the regulator – the Reserve Bank of India – to open a unique rupee vostro account.

In the past, UCO Bank served as the payment bank for oil imports from Iran, which is under international sanctions. However, Gazprombank has so far escaped the more severe penalties that Russia has been subjected to as a result of its invasion of Ukraine.

Before creating the account with the Russian counterpart, UCO Bank would put operating protocols in place, according to Prasad, who added that there is no specific timeline for when transactions can start.

Despite the prospect of sanctions brought on by the conflict in Ukraine, trade between India and Russia has soared in recent months. The Mint daily cited data from the Commerce Ministry to indicate that overall imports of goods like sunflower oil, fertilisers, silver, printed books, coriander seeds, and furniture items increased by more than 61% between April and July to $2.1 billion from $1.3 billion a year earlier.

However, crude has increased more than five times to $13.3 billion from $2.6 billion a year earlier, continuing to dominate bilateral commerce.

The Kolkata-based bank has received roughly 14—15 applications for opening special vostro accounts in accordance with the RBI circular from banks in various countries.

According to RBI regulations, this option will only be available to non-sanctioned institutions, according to Prasad.

State Bank of India, the largest lender in the nation, announced earlier this month that it is opening special rupee accounts to handle local currency trade settlements relating to Russia but that it is not the primary bank for such activity.

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