Top officials of the Reserve Bank of India, whose decision to bar dollar and euro payments for imports from Iran may hit crude oil imports, will meet their Iranian counterparts later this week to resolve the issue.
A deputy governor of RBI would meet top officials of the Iranian central bank in the next couple of days to resolve the payment settlement issue, sources said.
RBI has asked importers of goods from Iran to settle their payments outside the ACU (Asian Currency Union) framework, subsequent to which payments cannot be made in dollars or euros.
The Indian ambassador to Iran has been asked to arrange the meeting as soon as possible in Mumbai and a decision to this effect was taken here yesterday at a meeting, attended by Finance Secretary Ashok Chawla, among others.
Crude oil figures among the major products imported from Iran and the decision could hit its supply in India hard. As a result of the RBI order last week, crude oil import from Iran will stop from January, as no fresh letters of credit are being issued.
This year, a total of 18 million tonnes of crude oil is estimated to be imported from Iran, including about 7.1 million tonnes by MRPL. Other major crude oil importers from Iran include Essar Oil (about 5.5 mt), Indian Oil (about 3.5 mtT) and HPCL (about 3 mt). Private sector major Reliance Industries has stopped importing from Iran.
The ACU mechanism, followed by nine Asian nations, began in 1999 and the payments used to be made to Iran in dollars till 2008. After that, the US put sanctions on any trade with Iran in dollars and, subsequently ACU shifted to payment settlement in euro.
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While the European Central Bank (ECB) has not objected to payments being made in euros, it recently asked RBI to provide certificates that the products being imported were not on the US sanction list.
This led to RBI last week scrapping the ACU mechanism, leaving the importers to deal directly with the entities in Iran and without any dealings with RBI or the Iranian central bank.
The situation has led to Indian importers looking for a panel of banks for routing the payments.