India’s largest bank stops transactions of Russian entities under sanctions India’s largest lender SBI fears that any transaction with Russian entities under sanctions would invite sanctions on itself. (Photo by PRAKASH SINGH/AFP via Getty Images)
STATE BANK OF INDIA (SBI) has stopped processing transactions of Russian entities sanctioned by the West over Moscow’s invasion of Ukraine, sources said.
India’s largest lender has issued a circular as it fears that any transaction with entities or sectors under sanction will invite sanction on it as well, the sources said.
No transactions involving banks, ports or vessels appearing on the US, European Union or United Nations sanctions lists would be processed irrespective of the currency of the transaction, they said.
Payments due to such entities have to be processed by other mechanisms rather than through the banking channel, sources added.
SBI operates a joint venture in Moscow called Commercial Indo Bank Llc, where Canara Bank is another partner with a 40 per cent stake.
The bank has not responded to an email seeking comment on the matter.
Russia is one of the biggest suppliers of defence products and equipment to India mostly under government-to-government contracts.
Bilateral trade between India and Russia stood at $9.4 billion (£7.06 bn) so far this fiscal year, against $8.1 bn (£6.09 bn) 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 appliances, electrical machinery and equipment and fertilisers.
Major export items 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 Russia-Ukraine war entered its ninth day on Friday (3), with fighting intensifying in the Ukrainian capital Kyiv and other big 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 to isolate Russia from global trade.
India has so far maintained a neutral stance on Russia’s attack on Ukraine asking both countries to resolve the issue diplomatically.
India demanded “safe and uninterrupted” passage for all its nationals, including students still stranded in Ukraine and cities in the conflict zones, as it abstained in the UN General Assembly on a resolution deploring Russian aggression against Ukraine.