India may route oil payments to Iran through alternative banks

Jolted by Germany’s refusal to route its payments to Iran, India is exploring using Dubai or Turkey-based banks as conduit for paying for crude oil it imports from the Persian Gulf nation.

“We are exploring if Indian oil firms can open accounts in banks such as Dubai-based Noor Islamic Bank so they can undertake a direct transfer of money for oil they buy from Iran,” a senior government official said. Under the scheme being discussed, state-run National Iranian Oil Co (NIOC), too, will open an account in a UAE or Turkey-based bank to receive direct money transfer from oil companies.

“The mode of payment will be euro,” he said. “We have forwarded a list of banks to Iran... They have to choose the bank where both Indian firms and NIOC can open account.”

Indian firms opening account in the UAE or Turkey will, however, be subject to the Reserve Bank of India’s nod. Last month, Germany, under US pressure, stopped accepting money from India for onward transfer to an Iranian-owned, Hamburg-based bank, towards payments for the import of crude.