According to Indian sources, payments to Indian exporters are being remitted through Iranian Bank Parsian which has opened an account with UCO bank of India.
Parsian Bank is among private Iranian banks that are not included in sanctions against Iran’s state-owned banks. The agreement came after meetings between an Iranian delegation and officials from India’s finance and banking sectors over the past two days.
“Payments [to Indian exporters] have started coming very recently through Bank Parsian’s account with UCO bank,” M. Rafeeque Ahmed, president of the Federation of Indian Export Organizations, told Reuters.
Two government sources, speaking on condition of anonymity, noted that the conduit through Bank Parsian and UCO bank is only meant to settle payments for Indian exports to Iran.
Indian oil importers have been paying for around USD11 billion a year of crude since the middle of 2011 through Turkey’s Halkbank, but this route has been expensive for Iranian importers in view of Rial parity fluctuations.
On February 13, India’s The Economic Times reported that the Central Bank of Iran is working with the Reserve Bank of India to open a rupee account at the Kolkata-based UCO Bank to facilitate India-Iran oil trade.
According to the report, the mechanism was worked out after US sanctions against Iran’s financial sector, including the central bank, caused problems for inter-country clearing mechanisms.
The paper added that the rupee account is likely to be created by an Iranian private bank with the state-run UCO Bank to receive payments from Indian oil companies.
“It is learnt that names of Iranian private banks such as Bank Parsian and Karafarin Bank were discussed at the meetings between bureaucrats and regulators,” The Economic Times said.
India is Tehran’s second-biggest crude oil customer after China with Iranian oil accounting for about 12 percent of its needs.