In an effort to resolve a long-standing payment crisis, the Reserve Bank of India (RBI) has given permission to the Central Bank of Iran to open rupee accounts with two Indian banks, namely UCO and IDBI.
"Permission from the RBI has very recently come to open rupee accounts with two Indian banks, one of which is UCO," a top official of city-based UCO Bank told PTI. The other bank is IDBI Bank.
Both the accounts were opened in the respective banks' Mumbai branches.
The official said since the closure of the Asian Clearing Union (ACU) in December, payments for oil imports from Iran and non-oil exports to that country have been severely affected.
The UCO official said there was some understanding between the RBI and the Iranian Central Bank about the mechanism of making payments.
He said that the Iranian central bank would park funds in the two Indian banks to enable payments for oil imports by India as well as non-oil exports to Iran.
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To a query, he said it was not yet known whether the Iranian central bank had already parked funds in the two accounts.
The official said while payments for oil imports would initially be in rupees, it would be then converted into a separate currency, which was yet to be decided by the apex bank.
Meanwhile, the tea industry is deeply worried about non-payment for shipments made to Iran since December last year.
The Secretary of the Indian Tea Association (ITA), M Dasgupta, said since payment through the ACU ceased, no letters of credit could be opened by Iranian importers with any Indian commercial bank due to US sanctions.
He said unless the problem was resolved, orthodox tea producers would be hard-pressed, as they would have to hold on to their stocks.
The ITA official said Iran was an importer of high-value orthodox tea, which fetches an average price of Rs 190 per kilogram, as compared to Rs 145 per kilogram for other varieties of tea.
The other fear was that producers might lower production of orthodox tea to shift to other varieties like CTC.