Sanctions-hit Iran has suggested that India deposit rupee payments for crude oil in a local branch of a Russian bank and withdraw them in roubles in Moscow to pay the Iranians.
In New Delhi earlier this month, an official of the Central Bank of Iran asked Indian oil importers to open rupee accounts in local branches of Moscow-based Mir Business Bank CJSC and Sberbank Rossii and deposit oil payments in rupees.
According to the Iranian bank’s deputy governor, the importers could open rouble accounts in Moscow and convert rupees into roubles.
India conveyed that while routing through Mir would be difficult as its parent bank Melli Iran is under US sanctions for aiding the development of the Iranian nuclear programme, payments through Sberbank would need approval of the cabinet.
The Indian side assured Tehran of New Delhi’s cooperation in repatriation of oil payments, and asked Iran to submit a formal proposal so that it could be examined for feasibility as well as adherence to the given framework of regulations and restraints.
Iran has not received 55 per cent payment component from India since last February after the closure of euro deposits through Turkey’s Halk Bankasi. The balance 45 per cent is parked in the Iranian account of India’s UCO Bank with a large chunk remaining unutilised.
The deputy governor also sought support in opening Indian branches of Parsian Bank, Bank Pasargad and Eghtesad-e-Novin Bank. The three have not been granted licence as the Home Ministry denied security clearance to their applications.
Local branches of Iranian banks could help skirt US sanctions and make transactions easier for Indian firms to boost exports of rice, tea, yarn, textiles and fertilisers, and project exports.
India, which planned to import 15.4 million tonnes of crude oil from Iran in fiscal 2012-13, ended up importing 17 per cent less at 12.8 million until March-end 2013 because of difficulties in getting tankers to move the oil and their insurance coverage.
Since 2012, the US and EU have imposed sanctions on Iran’s oil and financial sectors and are threatening to get harsher. But India has reiterated that it will not halt oil imports from Iran.
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