The Reserve Bank of India (RBI) will help the country’s refiners clear $6.5 billion in outstanding debt which they owe to Iran for oil purchases, Indian media reports say. 

The debt has accumulated in bank accounts amid US-led sanctions which ban financial transactions with Iran. Last month’s conclusion of nuclear talks has created panic among Indian officials who fear the repayment could spark a run on the rupee.

Refineries have already been asked to stock up on dollar and euro reserves in overseas accounts to avoid draining the rupee.

According to the Press Trust of India, citing an unnamed official, the central bank is exploring options to assist the refiners to pay the past dues.

The decision follows a recent visit by Indian Foreign Secretary Rajiv Mehrishi to Tehran along with RBI representatives to discuss repayment of the debt.

“RBI will detail out the banking channels as well as payment schedule with its Iranian counterpart,” the official was quoted as saying.

The debt to Iran includes Essar Oil owing $3.34 billion, MRPL $2.49 billion, IOC $581 million, HMEL $97 million and Hindustan Petroleum Corp $29 million.

They have already paid about $3 billion through a limited payment channel which was opened following an interim nuclear deal between Iran and the West in Nov. 2013.

India pays 55% of its debts to Iran for oil purchases in euros and the rest in rupees.

Payments in euro through Turkey’s Halkbank were halted in February 2013 under US pressures, leading to the current debt. Forty-five percent of the dues has been cleared in rupees through UCO Bank in Kolkata.

PTI said India is keen to stagger the repayment instead of doing it in one go. New Delhi also seeks to raise oil imports but at the favorable terms which Tehran granted it during years of sanctions.

The terms included Iran providing shipping and insurance and a 90-day credit period for the restricted Indian imports.

By Press TV