New Delhi: The State Bank of India (SBI) has “long avoided” processing payments for Russian oil purchased by state-run refiners in order to steer clear of sanctions for violating the price cap imposed by a coalition of Western countries, the Mint newspaper reported.
In December 2022, the US, other G7 countries and Australia imposed a $60-per-barrel price cap on Russian oil in order to punish Russia for its invasion of Ukraine.
Mint reported that the US government has been checking whether Indian banks operating in the country are adhering to the price cap. A source told the newspaper that SBI was avoiding processing payments for Russian oil partly due to its large presence in the US.
“Since the time the OFAC [Office of Foreign Assets Control, an enforcement agency of the US federal government] sanctions have been imposed, SBI has been avoiding making payment transfer to Rosneft [a Russian oil firm] for the purchase of Russian oil,” they told Mint.
“It is because SBI has such a major presence in the US. This, despite the fact that bank transfer within the price cap can be made,” the person continued to say.
SBI has, in the past, also asked state-owned refiners to provide purchasing data in order to mitigate the risk of inadvertently breaching the price cap.
However, according to another source contacted by the newspaper, SBI’s avoidance of processing payments for Russian oil was “not a major issue” for Indian state refiners.
“As we can see, the flow of Russian crude has not stopped. Last year [2023], they constituted a large chunk of our imports. In case of avoidance of payment by SBI, refiners would have so far found alternative ways of payment,” Mint quoted its second source as saying.
Russia has grown to be India’s largest supplier of oil and provided 40% of India’s imports of the product as of the first half of the fiscal year 2023-24, news agency Reuters reported.
This is because India is dependent on oil imports due to lagging domestic output and has sought to take advantage of Western sanctions on Russian oil in a bid to reduce its oil import bill.
But Union oil minister Hardeep Singh Puri said earlier this month that oil imports from Russia had decreased recently due to less attractive prices.
India had paid as much as $84.20 per barrel of Russian oil in October last year, the highest it has paid since the price cap was imposed, Reuters reported.