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Rupee-rouble trade: Russia’s PSCB opens Re A/c with Yes Bank

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Yes Bank and Russia‘s Petersburg Social Commercial Bank (PSCB) have taken the lead in facilitating rupee-rouble bilateral trade that seeks to bypass the US dollar, ensuring uninterrupted cross-border business with Moscow entities amid Western sanctions on the country. PSCB, however, doesn’t feature in the list of sanctioned banks.

The Russian lender, which likely escaped the West’s scanner because of its insignificant presence in Europe‘s richer neighbourhoods and other developed economies, has opened a rupee account with nearly three dozen Russian companies settling payments for trades with New Delhi.

Separately, the Reserve Bank of India (RBI) is likely to issue an FAQ on standard operational procedures related to the rupee accounts, people familiar with the matter said.

“We have opened a rupee-rouble account with Yes Bank,” Vladimir L Pribytkin, PSCB’s founder and chairman, said in a reply to ET’s query. “We are currently transacting through it as we settle payments in rupees-roubles on behalf of our nearly three dozen Russian clients engaged in trades with India.”

Some of the PSCB’s clients include LLC Mettem-M, LLC Armtel and LLC NKP Farmindusry. The bank mostly deals with companies engaged in bilateral Indian trade related to pharmaceutical ingredients, fruits and spices. The RBI and Yes Bank did not comment on the matter. Individual companies could not be reached immediately for comments.

The Russian bank is possibly the first in the past few months to open a rupee account with an Indian lender in the aftermath of the Russia-Ukraine military conflict. The rupee account is likely to be converted into a special rupee account at a later stage after the central bank comes out with its FAQ clarification.

‘Special’ Tag

Yes Bank is said to have received three-four more applications from other Russian lenders such as MFK Bank.

Indian lenders have received nearly two dozen such applications, most of which are now lying with the central bank for approval, sources said.

Indian Banks’ Association (IBA) is facilitating the whole process with Russia-India trade becoming the focal point for such bespoke accounts.

“Most of the Indian lenders have sent all those applications to the RBI, which has not yet decided on approvals,” said a senior executive involved in diplomatic dialogues between two countries.

A ‘special’ tag to the rupee vostro account permits usage of surplus balance in Indian government securities.

More than a week ago, Indian lenders held meetings with the government and the RBI in an attempt to fix operational hurdles. Russian delegations, too, met Indian lawmakers and regulators.

Transmission of messaging, opening of letter of credit, common reference rate between the rupee and rouble, legal framework, and repatriation of rupees were among other procedural matters that came up for discussion.

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