New Delhi: Banking major State Bank of India has clarified it is just making necessary arrangements and processing requests that were received from various banks, including Russian banks, for settlement of trade in rupees with proper RBI guidelines and other policies and procedures, and it has not been identified as a nodal bank for the purpose.
This clarification from the bank comes a day after reports said India will soon start settling trade with Russia in rupees and SBI had agreed to facilitate the process.
"Concerning the news published by the media today about SBI being identified as the nodal bank for handling Russia-related transactions; SBI would like to clarify that RBI vide its circular on July 11, 2022, has authorized all the banks in India, including the State Bank of India to open Special Rupee Vostro account to promote invoicing in Indian Rupee," the lender said in a statement on Thursday.
"Accordingly, SBI is making necessary arrangements and processing requests received from various banks, including Russian banks, duly following RBI guidelines and our policies and procedures. SBI, as such, has not been identified as a nodal bank," the statement added.
On Wednesday, the president of India's exporter group Federation of Indian Export Organisations (FIEO) A Shaktivel told reporters that India will soon start settling trade with Russia in rupees as the SBI has agreed to facilitate the process.
Earlier this year, in order to promote the growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in the rupee, RBI decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in rupee.
Before putting in place this mechanism, banks will require prior approval from the Foreign Exchange Department of Reserve Bank of India, Central Office in Mumbai.
Meanwhile, reports say India's exports to Russia during the first four months of this financial year fell by about a third while imports continued to rise, especially on account of ramping up of inbound crude oil shipments. Rising imports typically are negative for forex reserves.
According to an estimate, there is a steep jump in Russian oil export to India, as it has increased ten times this year and Russian crude oil is now fulfilling almost ten per cent of India's imported oil consumption.
Against that backdrop, it is widely believed if the mechanism fructifies then it may go a long way in internationalizing the Indian currency rupee in the long run.