HDFC Bank, Canara Bank get RBI approval for rupee trade with Russia

HDFC Bank and Canara Bank have got approval from the RBI to open a special Vostro account for trade in rupees and both the approvals are for trade with Russia, banking industry sources said.

So far five Indian banks — UCO Bank, Union Bank, and IndusInd Bank being the other three — have received regulatory clearance for such trade. This apart, two Russian banks — Sber Bank and VTB — have the RBI’s approval. Both have branches in India.

According to sources, three banks have opened accounts so far though no deal has been done through this mechanism. The move is aimed at popularising trade in the domestic currency.

UCO Bank was the first Indian bank to receive the RBI’s approval to open a special Vostro account with Russia’s Gazprombank, which was set up by the world’s largest gas producer and exporter, Gazprom.

IndusInd Bank has tied up with six Russian banks while the remaining four Indian banks have done deals with one Russian lender each.

HDFC Bank’s counterpart in Russia is MTS Bank, the fintech unit of Russia’s largest mobile operator, MTS. On July 11, the RBI had issued a circular allowing trade settlement between India and other countries in rupees. At the current exchange rate, the Russian ruble equals Rs 1.35.