India’s largest public sector lender, the State Bank of India (SBI), has moved to halt trade and foreign currency transactions for Nayara Energy. The decision comes amid tightening global sanctions and recent tariff hikes by the United States. The step is aimed at avoiding any possible penalties from American or European authorities, as the company’s ties to Russian oil giant Rosneft place it in a sensitive position under current global trade rules.
What Triggered SBI’s Decision
The State Bank of India (SBI) has taken a proactive step to stop processing trade and foreign currency transactions for Nayara Energy. This comes at a time when global sanctions and new US tariffs have made oil-related transactions more complicated and risky.
Reports confirm this was not due to a government order. Instead, SBI’s senior management took the decision internally. The aim was to keep the bank fully aligned with international compliance rules, which are designed to prevent penalties when dealing with countries under sanctions.
The move follows recent US sanctions and tariff hikes, which have increased the compliance risks for banks. Sources quoted in The Economic Times said SBI wanted to ensure it avoids any trouble with American or European regulators.
Nayara Energy turns to Indian government as EU sanctions cause shipping crisis
Nayara Energy’s Position in the Oil Market
Nayara Energy is one of India’s largest oil refining companies. Its Vadinar refinery in Gujarat can process 20 million tonnes of crude oil each year, giving it an 8% share of India’s total refining capacity. India’s total refining capacity is over 256 million tonnes annually, making this facility an important part of the country’s energy supply chain.
In August 2017, Rosneft, a Russian state-owned oil major, led a consortium to acquire Essar Oil’s assets. Following the acquisition, the business was renamed Nayara Energy. Since then, the company has continued to import crude oil from overseas and refine it into petrol, diesel, and other fuels.
Nayara operates more than 6,500 fuel stations across India and also exports refined fuels to Europe and the Middle East. Its operations are similar to those of other major private refiners, including Reliance Industries.
How Sanctions and Tariffs Changed the Game
Nayara Energy’s troubles deepened in July when the European Union introduced its 18th sanctions package against Russia. The package, which took effect on July 18, banned fuel imports from Russia and set a $47.6 per barrel price cap on Russian crude oil.
🇨🇭 Swiss outrage erupts as Trump slaps record 39% tariffs, shaking F-35 jet deal
Given Rosneft’s major shareholding in Nayara Energy, these measures immediately drew attention from global banks. International financial institutions must comply strictly with such sanctions or risk heavy fines and restrictions.
For SBI, which has international operations and partnerships, the risks of non-compliance were too high. A breach could result in losing access to global financial systems — a serious threat for any major bank.
The US tariff hikes that followed only added to the pressure. With Washington tightening trade rules and increasing duties, the chance of being caught in a sanctions violation became even greater. The combination of EU sanctions and US tariffs has created a difficult environment for Indian banks dealing with companies linked to Russia.
The July sanctions marked a turning point. Many banks, including SBI, began reviewing their policies to ensure full compliance. For SBI, stopping Nayara Energy’s trade and foreign currency transactions was seen as the safest move for now.
This development shows how events in distant capitals like Washington and Brussels can have a direct impact on Indian companies and banks. It also reflects the delicate balance financial institutions must maintain when working across borders in today’s complex global economy.