The country’s largest lender State Bank of India has stopped processing transactions of Russian entities that have been sanctioned by the West over Moscow’s invasion of Ukraine, sources said.
Sources said that to give effect to this, SBI has issued a circular as it fears that any transaction with entities or sectors will get sanctioned.
He said that any transaction involving entities, banks, ports or ships on the US, EU or UN sanctions list will not be processed irrespective of the currency of the transaction.
Sources said that payments to such entities are to be processed by another mechanism instead of the banking channel.
SBI operates a joint venture called Commercial Indo Bank LLC in Moscow, where Canara Bank is another partner with 40 per cent stake.
The bank did not respond to an email seeking comment on the matter.
Russia is one of the largest suppliers of defense products and equipment to India, mostly under government-to-government contracts.
Bilateral trade between India and Russia stood at USD 9.4 billion so far this financial year, up from USD 8.1 billion in 2020-21.
India’s main imports from Russia include fuels, mineral oils, pearls, precious or semi-precious stones, nuclear reactors, boilers, machinery and mechanical equipment; Electrical machinery and equipment and fertilizers.
The major items exported from India to Russia include pharmaceutical products, electrical machinery and equipment, organic chemicals and vehicles.
In the past too, India had devised a mechanism to pay for imports from Iran when sanctions were imposed on the Persian Gulf nation.
The Russo-Ukraine war entered its eighth day on Thursday as fighting intensified in Ukraine’s capital Kyiv and other major cities.
Last week, the Group of Seven (G-7) major economies imposed punitive sanctions against the Russian central bank.
They also decided to remove Russian banks from the SWIFT inter-banking system – which aims to isolate Russia from global trade.
India has so far maintained a neutral stand on Russia’s attack on Ukraine and has asked both countries to resolve the issue diplomatically.
India called for a “safe and uninterrupted” passage for all its citizens, including students still trapped in Ukraine and cities in conflict zones, as it moved to the UN General Assembly on a resolution condemning Russian aggression against Ukraine. was absent and reiterated that differences could only be resolved through dialogue and diplomacy.
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