New Delhi, July 11 -- A rupee-settlement mechanism rolled out in 2022 to ease trade with sanction-hit countries has failed to gain traction with India's largest crude supplier-Russia. Indian refiners continue to source Russian crude supplies through traders based in the United Arab Emirates and settle transactions in dirhams.

Most transactions for crude oil supplies are executed via West Asia-based traders rather than through a direct bilateral payment system between Indian and Russian entities, according to two people familiar with the matter, who spoke on the condition of anonymity.

"There was a payment issue, which has been sorted out now. Payments have been happening in AED (UAE dirham) because Indian state-run refiners are primaril...