India's HDFC Bank, Canara Bank get approval for rupee trade with Russia

HDFC Bank and Canara Bank were allowed to hold "vostro accounts", which are held by banks on behalf of another, often foreign bank, and this forms a key part of correspondent banking

India's central bank has allowed HDFC Bank Ltd and Canara Bank Ltd to open a special "vostro account" for trade in rupees with Russia, local newspaper Business Standard reported on Monday, citing banking industry sources.

Vostro accounts are held by a bank on behalf of another, often foreign bank, and this forms a key part of correspondent banking.

The Reserve Bank of India (RBI), HDFC Bank and Canara Bank did not immediately respond to requests for comment.

The RBI in July introduced a new mechanism for international trade settlements in rupees, aiming to promote exports and facilitate imports.

The measure was seen as aiding business ties with Russia in case of more stringent Western sanctions against Moscow over its invasion of Ukraine.

Indian trade secretary Sunil Barthwal earlier this month said the country has given nine banks approval to open "vostro" accounts to help facilitate trade in rupees with Russia.

Russian energy major Gazprom had opened an account with UCO Bank, while VTB Bank and SberBank have opened accounts with their own India-based branch offices.