Russia-Ukraine war: What is concerning RBI, SBI, other banks in India?

The ongoing war between Russia and Ukraine has dented investors' sentiments on the stock market in India.

The ongoing war between Russia and Ukraine has ripple effects on crucial aspects of the global economy - stock markets around the world and international oil prices. Now banks in India have started getting concerned as the conflict escalates between Moscow and Kyiv.

The State Bank of India (SBI) has stopped processing transactions of Russian entities that have been sanctioned by the West over Moscow's invasion of Ukraine. To effect this, SBI has issued a circular as it fears that any transaction with entities or sectors under sanction will invite sanction on it as well, according to a PTI report.

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.

Payments due to such entities have to be processed by other mechanism rather than through the banking channel.

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

Banks in India were scrambling after bills for imports from Russia have started bouncing and payments for exports have been stuck in the wake of sanctions imposed by the west on Russia following its invasion of Ukraine, Reuters reported.

The Reserve Bank of India (RBI) met with select bankers and is trying to assess the exposure that lenders have to Russia and to Ukraine and the impact it may have on Indian banks, said another senior banking executive.