India to pay for Iranian crude through Turkish bank

New Delhi: India and Iran may be close to resolving a niggling dispute over arrears for crude shipments that have accumulated over a seven month-long period, since last December. India, which owes Iran close to $7 billion for crude oil imports, may soon clear the first instalment of these arrears through a Turkish bank, according to ministry for petroleum sources.

The government is likely to ask Indian companies to open rupee accounts in the Union Bank of India as part of an arrangement under which Union Bank will make payments to Turkey's Turkiye Halk Bankasi SA, or Halkbank.

An Iranian delegation is expected to visit India over the weekend to discuss the arrangement.

It is being reported that refiner Mangalore Refinery & Petrochemicals Ltd (MRPL), largest Indian importer of Iranian crude, may already have cleared an initial instalment.

The seven-month-long payment impasse resulted with India's central banker barring all financial transactions through the Asian Clearing Union, citing UN sanctions against Iran as the reason, but acting under US pressure.

This will be a second attempt by India and Iran to secure a viable route for payments after an earlier attempt by Indian companies, who made euro payments through Iran's EIH Bank based in Hamburg, Germany, was disrupted when Germany barred transactions under US pressure.