The Reserve Bank of India (RBI) has given its approval to two Russian banks for opening special vostro account for rupee trade.

Sberbank, JSC VTB — the largest and second largest bank of Russia — are the first foreign lenders to receive this approval after the central bank announced the norms on INR trade in July. Both lenders have branch presence in India.

Earlier this month, state-run UCO Bank received the RBI’s approval to open a special Vostro account with Gazprombank of Russia.

While the Kolkata-based lender is in the process of opening the account, the bank has received requests from various foreign lenders for opening such an account.

On July 11, the central bank, while allowing banks in India to open special Vostro for INR trade, said the move was aimed at promoting growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in INR.

Banks have to take prior approval from on doing such transactions and the exchange rate between the currencies of the two trading partner countries should be market-determined, the RBI said.

Founded in 1841, Sberbank is the largest bank in Russia, Central and Eastern Europe, and one of the leading financial institutions worldwide, with over 30 per cent market share in Russia.

In 2010, Sberbank was granted a licence for banking operations in New Delhi.

According to the bank’s website, the main objective of Sberbank Branch in India is to ease Indo-Russian bilateral trade and to maintain a strategic presence of the Sberbank Group in the region.

The main focus areas of the branch are remittances, trade finance and corporate business.

VTB is the second largest Bank in Russia, with 85 per cent shareholding by the Government of the Russian Federation, with an asset base of more than $100 billion.

VTB Bank has a presence in 19 countries.

The VTB branch in New Delhi started operations in 2008 and provides counselling and professional services to clients doing two-way business from Russia and India as well as from other countries wherever VTB has a presence.

According to the bank’s website, VTB New Delhi branch offers assistance in fund-based and non-fund based advances, which include term loans for creation of assets, export/import guarantee, documentary credits, packing credit, post- shipment loans, and other corporate banking services.

“We also provide special ‘Counseling & Professional Services’ to our clients from Russia and India,” it said.

Trade between India and Russia started growing after the latter invaded Ukraine in late February.

Russia became the second largest oil supplier to India in June and July, with Iraq continuing in the top spot.

The rise in imports of Russian oil known as Urals (a crude blend) started increasing from the month of March, after Russian oil companies started offering heavy discounts.

According to reports, India imported 738,024 barrels per day from Russia in August, at least 18 per cent lower than in July.