Iran Seeks European Bank to Route Oil Funds From India.

GLOBAL sanctions-ridden Iran has launched a frantic search across Europe to find a bank that will ensure undisrupted payments against crude supplies to India. Iran will come up with a routing mechanism in a week.

Alternative funds transfer beca me necessary as attempts to make payments via the EIH Bank in Hamburg did not bear fruit. Iran’s national oil company National Iranion Oil Com pany has a euro acc o unt in the bank through which crude payments wer e to be made.

Crude payments didn’t get credited in Bank of Tehran as EIH Bank is under surveillance of inter n a tional security agencies, a finance ministry official, who was in Tehran last wee k to find plausible solu tion for crude payments, told Financial Chronicle.

Iran has agreed to Indian proposal for getting paid on a consignment basis against crude exports. “Each payment will also bear a declaration that it does not involve any funding of nuclear activity,” the official added.

Meanwhile, the SBI is inundated with funds from Indian oil firms payable to Iran against crude during last 3-4 months.

The RBI said Indian firms would have to settle payments outside Asian Clearing Union (ACU). It has caused concern for firms that source crude worth $12 billion from Iran annually and India buys 21 million tonnes crude from it. Iran is under pressure from western countries to curb its nuclear programme. Washington praised India's move for not continuing with ACU. It would reduce what US sees as misuse of funds by Iran to support its nuclear programme.

UN sanctions on Iran do not cover crude oil sales. But trading and making payments to Iran have become tough in recent years. On Saturday, US, Britain, France, Russia, China and Germany have started final round of talks with Iran to curb its nuclear programme in Istanbul. Catherine Ashton, EU’s foreign policy chief, represents them.

Iran offers 90-day credit to Indian firms to clear bills for crude import, while other Gulf countries give 30 days. Till now, companies routed payments through SBI. And, RBI as well as Bank of Tehran cleared all payments through ACU bi-monthly.

Tehran-based ACU is a platform where the participant countries settle payments for intra-regional transac tions among central banks on a multilateral basis. The objectives are to facilitate payments among member countries for transactions to help economise foreign exchange reserves and transfer costs, as also promote trade.

Iran has assured India non-stop crude supplies and is ready to accept payments in Indian rupee. But there is a concern that the government fears rupees buildup, as Indian exports to Iran are negligible. This may not be the case with China and Korea. China has trade surplus with Iran and the latter will have to periodically make payments.

Source : mydigitalfc.com