US sanction to make payment for Iran difficult

From February 6, Indian banks would not be able to transfer money to Iran for the oil imported by India from the gulf nation. This is because a new US treasury sanction, which bars banks from transferring IranÂ’s oil revenues from importing nations to Tehran, comes into effect from February 6.

So far, India has been making 45 percent of the payment to Iran for its crude oil in rupees through the Kolkata-based Uco Bank. The remaining 55 per cent of the $10 billion oil imports from Iran is settled through Iran-based Turkiye Halk Bankasi bank.

Since July 2011, India has been using euros to clear most of its purchases of Iranian oil through Ankara-based Halk Bankasi.

The new US sanctions would mean that National Iranian Oil (NIOC) will have to essentially keep all the revenue it earns from selling oil to Indian refiners in Uco Bank or any other permitted local bank. These can be used for buying permissible goods and services.

However, IranÂ’s imports from India are just one-fifth of the revenue it earns from sale of oil. With US sanctions barring sale of any defence or technology intensive equipments, Iranian imports from India will continue to remain low. Also, New Delhi has not allowed Iranians to invest in its securities or debt, reports indicate.