Public sector lender Uco Bank is likely to have secured government approval to handle trade payments for Nayara Energy Ltd.
The move comes nearly two months after the private refiner was sanctioned by the European Union, prompting leading financial institutions to distance themselves.
According to a Bloomberg report, senior Uco Bank executives have met top officials at the finance ministry to discuss the arrangement.
The ministry has asked the bank to take the lead in executing Nayara’s trade-related payments, though operational details — including the choice of currency — are still being finalised. A query sent by The Telegraph to Uco Bank is yet to garner a response.
Nayara, majority-owned by Russian oil major Rosneft, had approached government authorities last month seeking help in securing a domestic banking partner with limited international exposure.
The refiner needs support to process payments for crude imports and to receive proceeds from fuel exports. Uco Bank, which previously managed transactions for Iranian oil trades, emerged as a suitable candidate.
Nayara has also requested government assistance in arranging vessels to transport refined products within India. The company is also seeking aid to source equipment and materials needed for maintenance. The private refiner has also approached the Centre for High Technology, an advisory body under India’s oil ministry.
The EU blacklisted Nayara in July, disrupting operations at its Gujarat refinery, which contributes nearly 8 per cent of India’s refining capacity.
Since the sanctions, the company has demanded advance payments or letters of credit before dispatching shipments, reduced refining throughput, and seen vessels divert from its terminal.