UCO Bank: Indian refiners pay for Iranian oil in rupees
India began paying Iran for oil in rupees, a senior bank official said, the first such payments since the United States imposed new sanctions against Tehran in November.
Washington gave a six-month waiver to eight countries, including India, allowing them to import some Iranian oil, reported Reuters.
India, the world’s third-biggest oil importer, wants to continue buying oil from Iran as it offers an extended credit period, while Iran will use the rupee funds to mostly pay for imports from India.
“Today we received a good amount from some oil companies,” Charan Singh, executive director at state-owned UCO Bank told Reuters.
New Delhi recently issued a notification exempting payments to the National Iranian Oil Company (NIOC) for crude oil imports from steep withholding taxes, enabling refiners to clear an estimated $1.5 billion in dues.
An industry source said India’s top refiner Indian Oil Corp. and Mangalore Refinery & Petrochemicals have made payments for Iranian oil imports.
Iran is devising payment mechanisms including barter with trading partners like India, China and Russia following a delay in the setting up of a European Union-led special purpose vehicle to facilitate trade with Tehran, its Foreign Minister Javad Zarif said earlier on Tuesday.
In the previous round of US sanctions, India settled 45 percent of oil payments in rupees and the remainder in euros but this time it has signed deal with Iran to make all payments in rupees as New Delhi wants to fix its trade balance with Tehran.
Indian imports from Iran totaled about $11 billion between April and November, with oil accounting for about 90 percent.
Singh said Indian refiners had previously made payments to 15 banks, but they will now be making deposits into the accounts of only nine Iranian lenders as one had since closed and the US has imposed secondary sanctions on five others.
The nine banks are Saman Bank, Bank Pasargad, Eghtesad Novin Bank, Karafarin Bank, Sarmayeh Bank, Middle East Bank, Shahr Bank, Hekmat Iranian Bank and Tourism Bank.