The State Bank of India (SBI) is willing to work with Russian banks not facing sanctions and stay in the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network to create a special Rupee Vostro Account (SRVA) for to open invoicing in Indian currency. The country’s largest lender said in a statement it had not been identified as a hub bank for settling Russia-related transactions.

In July, the Reserve Bank of India (RBI) allowed banks in India, including SBI, to open an SRVA to encourage Indian rupee billing, subject to certain safeguards.

Accordingly, the bank said in a statement that it is “making the necessary arrangements and processing inquiries from various banks, including Russian banks,” according to guidelines set by the RBI.

Banking regulators in July allowed Indian banks to open SRVAs with lenders from other nations to conduct foreign business in Indian currency. A Vostro account is opened by a domestic bank with a foreign correspondent bank as a representative of the domestic bank.

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After the standoff between Russia and Ukraine, many Russian banks are facing sanctions from Western countries. They were also removed from the SWIFT network. This meant a loss of access to the normal smooth and instant transactions the network offers and a disruption in payments for Russia’s valuable energy and agricultural exports. Banks facing sanctions now have to deal directly with other banks, causing delays and additional costs.

In 2018, public lender UCO Bank was selected to on-lend payments from India for oil imports from Iran in a bid to overcome US sanctions. As part of the payment mechanism, the money from oil imports from Iran was to be deposited in escrow accounts held by five of their banks at the state-owned UCO Bank.

SBI executives said RBI has made it very clear that opening such special accounts is subject to sanctioned companies and any negative list by the Financial Action Task Force.

SBI would not work with many Russian banks and entities facing sanctions due to its strong presence in developed markets that have imposed sanctions on Russia.

Some banks from countries with significant trade with India have expressed interest in a dedicated Vostro account. The talks are still in the preliminary stages, they added.