UCO Bank has received government approval to facilitate trade payments for Nayara Energy, which is subject to sanctions by the European Union. The approval comes after major financial institutions avoided transactions with Nayara due to its partial ownership by Russian oil company Rosneft.

The decision enables UCO Bank to act as a channel for trade settlements, ensuring continuity of operations for Nayara Energy while adhering to regulatory guidelines. Operational details, including the choice of currency and transaction mechanisms, are currently being finalised by the bank and relevant authorities.

Officials noted that the move reflects the government’s efforts to safeguard domestic energy interests while navigating international sanctions frameworks. By allowing UCO Bank to support trade payments, India aims to maintain energy security and ensure uninterrupted supply chains for critical oil imports.

Industry analysts observe that such approvals are carefully structured to comply with national and international regulations, balancing the need for business continuity with sanctions obligations. UCO Bank’s role is expected to include monitoring transactions closely to ensure transparency and compliance.

The development also underscores the challenges faced by companies with partial foreign ownership in sanctioned sectors, as they often encounter difficulties in securing banking and trade services. By stepping in, UCO Bank provides a mechanism for Nayara Energy to continue operations without major disruptions.

While financial institutions globally remain cautious in dealing with sanctioned entities, this approval signals India’s intent to protect strategic economic and energy interests. It also highlights the evolving role of domestic banks in facilitating trade under complex international regulatory environments.

As the operational framework is finalised, UCO Bank’s facilitation is expected to stabilise trade flows for Nayara Energy, ensuring that the company can meet contractual obligations and sustain its business activities despite the EU sanctions.