Payment of $700 mn to Iran won't impact currency market: RBI

Reserve Bank Deputy Governor H R Khan today said $700 million will be paid to Iran on the due date as part of oil dues without having any impact on the currency market.

"We have already cleared $700 million. Remaining $700 million has already been purchased and it will be paid on due date," he said on the sidelines of National Financial Inclusion Conference here.

"As of now $1,400 million has been cleared, $700 paid and $700 acquired. Its acquired, so there will be no impact in the market," he said.

Khan, however, did not disclose the payment date and other details.

This will the second payment since Iran reached a historic nuclear deal with the US and other western powers.

According to sources, the second tranche is scheduled to be paid on October 12.

Essar Oil, Mangalore Refinery and Petrochemicals Ltd, Indian Oil Corp and Hindustan Petroleum Corp had on September 30 paid the first tranche of $700 million to clear a chunk of the $6.5 billion they owe to Iran for past purchases.

The refiners deposited rupee equivalent of $700 million in the Kolkata-based UCO Bank. UCO Bank purchased dollars for onward transmission to Iran.

The remaining $4 billion will be cleared in tranches after payment channels are okayed.

The dues to Iran on crude oil that refiners buy have accumulated as western sanctions blocked payment routes since 2013.

About 45 per cent of the oil import bill is paid in rupees in the UCO Bank branch and the rest has added up.

Since February 2013, refiners like MRPL and Essar Oil have been paying 45 per cent of dues on purchase of crude oil from Iran in rupees through UCO Bank, Kolkata.

The remaining has been accumulating, pending finalisation of a payment route and mechanism. They had last year paid nearly $3 billion in six installments through a limited payment channel following start of nuclear talks between the West and Iran.