US Treasury warns India's banks about business with Russia

Indian Bank

24/07/2024 17:00

By Karen Freifeld
       July 24 (Reuters) - A U.S. Treasury official warned
India’s banks on Wednesday that financial institutions that do
business with Russia's military industrial base risk losing
access to the U.S. financial system, according to a letter seen
by Reuters.        
   "We know that the Russian military relies on importing
sensitive goods, like machine tools and microelectronics, and it
looks to foreign financial institutions to facilitate these
transactions,” Deputy Treasury Secretary Wally Adeyemo said in
the letter to the Indian Banks' Association.
    While the letter does not identify a particular concern
about India's banks, New Delhi has resisted pressure to distance
itself from Moscow since Russia invaded Ukraine in 2022 and,
after Prime Minister Narendra Modi met Russian President
Vladimir Putin this month, said it is exploring ways to boost
its exports to Russia.   
    The letter follows an executive order U.S. President Joe
Biden issued in December authorizing sanctions against foreign
financial institutions that conduct business with Russia's
military industrial base, Adeyemo said, and Treasury's recent,
expansive interpretation of who is part of Russia's military
industrial base. 
    The Indian Banks' Association could not immediately be
reached for comment.
    The U.S. is eager to further strengthen its economic
relationship with India, Adeyemo also said. Trade between the
two countries increased by over 110 percent in a decade, he
wrote, and they remain among each other's largest trading
partners. 
    But the U.S. and a global coalition of countries is
committed to ending Russia's unprovoked war by depriving it of
the "financial and material means to fight," he said,  a
reference to sanctions and export controls imposed on Russia
since its invasion.
    He asked the bank group to respond within 30 days with steps
they could take with Treasury to make India's companies and
financial institutions aware of the U.S. executive order and its
ramifications.
    "Any foreign financial institution that does business with
Russia's military industrial base risks being sanctioned itself,
and it could lose access to the U.S. financial system, and
likely other financial systems," he said.
    Besides the bankers group, the letter was sent to Indian
industry associations.

 (Reporting by Karen Freifeld, Editing by Chris Sanders and
William Maclean)
 ((karen.freifeld@thomsonreuters.com; +1(646) 223-6921;))