Russia’s Gazprombank opened a Special Rupee Account with the state-owned UCO Bank, paving the technique for bilateral trade between Moscow and New Delhi, reports media. This change would help to increase the imports of inexpensive oil from Russia.

Previously, the Reserve Bank of India (RBI) came out with a modified special rupee account for bilateral trades between Rupee and other Currencies besides the US dollar. Gazprombank only faces sectorial authorisations but is not under the Specially Designated Nationals (SDN) sanctions. UCO Bank and Gazprombank did not aside immediately.

On July 11, the RBI allowed invoicing and expenditures for International Trade in Rupees, theoretically simplifying greater bilateral business with Russia, which is facing a wide range of Western sanctions and is virtually deducted from the Standard cross-Border Payment platforms. The move paved the way for clearance of payments in rupees amid trades between India and Russia by giving greater flexibility in the Vostro accounts operation that Russian banks opened with Indian banks for the purpose. A Vostro account is a foreign bank opening with an Indian bank in the domestic currency, i.e. rupees.

A ‘special’ tag to the rupee Vostro account allows the surplus balance to be used in the Indian Government Securities. Experts believe that UCO, having little exposure to the US market, is the right candidate for the bilateral trade payments between India and Russia, not affecting its business amid the US sanction on the Russian bank.