State Bank of India stops processing transactions of sanctioned Russian entities

State Bank of India has stopped processing transactions of Russian entities which have been sanctioned by the West over Russia's invasion of Ukraine.

The SBI has issued a circular as it fears that any transaction with entities or sectors under sanction will invite sanction on it as well, PTI reported today quoting unnamed sources, our New Delhi correspondent reports.

No transactions involving entities, banks, ports or vessels appearing on a US, European Union or United Nations sanctions list would be processed irrespective of the currency of the transaction, said the sources.

Payments due to such entities have to be processed by other mechanisms rather than through the banking channel, it added.

SBI operates a joint venture in Moscow called Commercial Indo Bank Llc, where Canara Bank is another partner with a 40 percent stake.

Bilateral trade between India and Russia stood at USD 9.4 billion so far this fiscal year, against USD 8.1 billion in 2020-21.

Russia is one of the biggest sources of India's defence products and equipment mostly under government-to-government contracts.

India's main imports from Russia include fuels, mineral oils, pearls, precious or semi-precious stones, nuclear reactors, boilers, machinery and mechanical appliances, electrical machinery and equipment and fertilisers.

Major export items from India to Russia include pharmaceutical products, electrical machinery and equipment, organic chemicals and vehicles.

In the past, India had devised a mechanism to pay for imports from Iran which had come under sanction for its controversial nuclear programme.

Last week, the world's major economies under the banner of Group of Seven (G-7) imposed punitive sanctions against the Russian central bank.

They also decided to remove Russian banks from the SWIFT inter-banking system.