Los Angeles, Jan 1 (IANS) US President Barack Obama has signed into law a wide-ranging defence funding bill that also calls for sanctions against financial institutions doing business with Iranian banks.

The bill, approved by the Congress last week, aims at reducing Tehran’s oil revenues, but gives Obama powers to waive penalties as required, Xinhunet.com reported Sunday.

Obama singed the bill Saturday in Hawaii.

However, he has “serious reservations” about provisions regarding counter-terrorism efforts, including clauses that regulate the detention, interrogation and prosecution of suspected terrorists.

“The fact that I support this bill as a whole does not mean I agree with everything in it,” Obama said in a statement in Hawaii, where he is having a family holiday.

According to an amendment contained in the sweeping bill, foreign financial institutions doing business with Iran’s central bank are banned from opening or maintaining correspondent operations in the US.

The ban only applies to foreign central banks for transactions that involve the sale or purchase of petroleum or petroleum products. The penalties do not go into effect for six months, according to the bill.

Obama can waive the penalties for national security reasons.

US officials said Washington was engaging with its foreign partners to ensure the sanctions can work without harming global energy markets. They also noted that the bill does not change US strategy for engaging with Iran.