India to pay Iran for oil through German central bank

February 25th, 2011 - 9:11 pm ICT by IANS  

Pranab Mukherjee New Delhi, Feb 25 (IANS) India is working out an arrangement through Deutsche Bundesbank (the German Central Bank) to pay Iran for crude oil purchases, an official statement said Friday. Finance Minister Pranab Mukherjee has assured his Iranian counterpart, Finance and Economic Affairs Minister Seyyed Shamseddin Hooseini that India would like to make the payment due to Iran as expeditiously as possible especially on account of oil and oil products, the finance ministry said in a statement.

Hooseini called on Mukherjee at his North Block office here Thursday.

Assuring expeditious payments, the finance minister said both the countries should work out a mechanism that would facilitate timely payment by removing the bottlenecks.

India has been negotiating a payment mechanism with Iran since December last year after the Reserve Bank of India barred Indian oil marketing firms from using the Asian Clearing Union (ACU) to pay for crude and gas imports from Iran.

India is Iran’s second largest importer of crude, having bought 21 million tonnes in 2009-10. Iran accounts for nearly 14 percent of India’s oil import bill, the second highest after Saudi Arabia.

The ACU, with India, Pakistan, Bangladesh, Bhutan, Maldives, Nepal, Sri Lanka, Myanmar and Iran as member countries, settles payments for intra-regional transactions among participating central banks on a multilateral basis.

The RBI’s move to bypass the ACU route to settle dues follows the decision of the American and European banks not to process payments for Iranian fuel supplies.

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