Sources say that the country’s largest state-run bank fears that Western countries may impose restrictions on transactions with these entities. Last week, seven major economies of the world, including the US, imposed sanctions on Russia.
It has been said in the circular that no transaction of any kind will be done with the companies, banks, ports and ships which have been banned by the US, the European Union and the United Nations.
Sources said that the dues of the banned entities will be paid through other arrangements than through banking channels. SBI runs a joint venture named Commercial Indo Bank in Moscow, Russia. Canara Bank also holds 40 per cent stake in it. SBI did not respond to e-mails sent regarding the matter. Earlier, India had taken a similar decision even after the restrictions imposed by the western countries on Iran.
Russia is one of the major suppliers of defense products and equipment to India under government-to-government contracts. The bilateral trade between the two countries so far in the current financial year was $ 9.4 billion, which was $ 8.1 billion in 2020-21.
Imports from Russia: India mainly includes fuels, mineral oils, pearls, precious or semi-precious stones, nuclear reactors, boilers, machinery and mechanical equipment from Russia.
Exports from India: Pharmaceutical products, electrical machinery, organic chemicals and vehicles are exported to Russia.
Preparing to withdraw from global trade
Following the attack on Ukraine, the world’s major economies have imposed punitive sanctions against Russia’s central bank. They have also decided to remove Russian banks from the SWIFT inter-banking system. Its aim is to isolate Russia from global trade. India has so far maintained a neutral stand in this matter. Both the countries have been appealed to resolve the issue diplomatically.
Government may give bank guarantee to Indian exporters
To help Indian exporters facing cash crunch after the sanctions imposed on Moscow, the government is considering giving guarantees for letters of credit and easy loans.
Two sources familiar with the matter said that Indian banks are scrambling after import bills from Russia bounced and payments for exports got stuck. A government official said that Indian exporters owe about $ 500 million to Russia. In such a situation, to help Indian exporters, the government can guarantee them to get easy bank loans.