RBI approves two Russians for special Vostro account

The Reserve Bank of India has approved two Russians for opening a special Vostro account for trade. Sberbank, JSC VTB - the largest and second largest bank in the world, are the first foreign lenders to have received this approval after the central bank announced the norms on INR trade in July. Both of the lenders have branches in India.

State-owned UCO Bank received the approval of the RBI to open a special Vostro account with Gazprombank earlier this month, but the bank received requests from various foreign banks to open an account.

On July 11, the central bank, while allowing India to open special Vostro for INR trade, said the move was intended to promote growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in INR.

The exchange rate between the two trading partner countries should be market-determined, and the prior approval from the two trading partner countries should be given prior approval, according to the said.

Sberbank, founded in 1841, is one of the largest banks in Russia, Central and Eastern Europe and one of the leading financial institutions worldwide, with over 30 per cent market share in 2010. According to the bank's website, the main objective of the Sberbank Branch in India is to ease Indo-Russian trade and maintain a strategic presence of the Sberbank Group in the region. The branch's main focus areas are remittances, trade and corporate business.

VTB is the second largest Bank in Russia, with 85 percent of the shareholding by the government of the Russian Federation, with an asset base of more than $100 billion. The VTB Bank has a presence in 19 countries. The VTB branch in New Delhi started operations in 2008 and provides advice and professional services to clients doing two-way business from Russia and India as well as from other countries where VTB has a presence.

According to the bank's website, the VTB New Delhi branch offers assistance in fund-based and non-fund based advances, including term loans for creation of assets, export import guarantee, documentary credits, packing credit, post- shipment loans, and other corporate banking services. It said we also provide special 'Counseling Professional Services to our clients from Russia and India.

Trade between India and Russia began to grow after the latter invaded Ukraine in late February. Russia became the second largest oil supplier to India in June and July, with Iraq remaining in the top spot. The rise in Russian oil imports, known as Urals a crude blend, began increasing in the month of March after Russian oil companies started offering heavy discounts. In August, India imported 738,024 barrels of crude per day from Russia, at least 18 per cent less than in July, according to reports.