The Reserve Bank of India (RBI) has directed banks to conduct due diligence on small Russian banks that have not been sanctioned by the West for its invasion of Ukraine, before it allows them to participate in the domestic fund clearing system and resume bilateral payments, a person with the knowledge of the matter told Livemint.

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“We have found out a few banks that have been suggested by the government as well but we do not have any relationship with these lenders so far," the person cited above said.

Also read: Explained: Why India and Russia are exploring alternative payment channels to continue trade

The Indian banks have identified six smaller Russian banks, including Bank Zenit, that have been spared from the sanctions. For SWIFT transactions, the transacting Indian and Russian banks will need to work through SWIFT’s Relationship Management Application (RMA) system. The system is a SWIFT-mandated authorisation that allows banks to define which counterparties can send them financial messages.

Also read: Indian Oil Corporation buys Russian crude at deep discount

Following Russia’s invasion of Ukraine, the West imposed heavy sanctions on Russia. The RBI and other commercial banks are now discussing ways to resume payments between Russia and India. The rouble-rupee exchange is being considered.

Meanwhile, the Department of Economic Affairs and Financial Services, and the the ministries of commerce and industry and external affairs are brainstorming alternative ways to release payments to exporters and businesses affected by the sanctions on Russia, as per the Livemint report.

Click here for updates on Russia-Ukraine war

(Edited by : Shoma Bhattacharjee)