The Centre will be authorising the State Bank of India to promote Rupee trade with Russia. Soon, Moscow will name its bank to start the mechanism as informed by the exporters’ body Federation of Indian Export Organisations (FIEO) on Wednesday.

Due to the sanctions imposed by the United States of America and Europe upon Russia after Moscow’s attack on Ukraine, a large part of trade between India and Russia is getting settled in Rupee.

In April-July, the first four months of this fiscal year, India's exports to Russia fell by about a third, while imports leaped as refiners raced to buy discounted Russian oil, according to government data.

In July, the Reserve Bank of India issued a detailed circular asking the banks to put the additional arrangements for export and import transactions in Rupees, in place. This is in view of the increasing interest of the global trading community in the domestic currency.

Indian companies are already swapping out dollars and euros for Asian currencies to settle trades to avoid Western sanctions on Russia.

The apex bank had said for settlement of trade transactions, the concerned banks will require special Rupee Vostro accounts of correspondent bank/s of the partner trading country.

The Federation of Indian Export Organisations (FIEO) President, A. Shaktivel said the government could extend export incentives under the rupee trade mechanism to boost shipments to Russia and increase the acceptability of the domestic currency. He informed that the SBI is equipped with doing business in the rupee with Russia, yet Moscow has to identify one bank.

Saktibhel quoted Commerce Secretary, B.V.R Subhramanyam that the Russian government is going to identify a bank. “Rupee trade with Russia will happen”, he claimed.

The name of the bank will be announced within 15 days by Russia.

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