Govt allows Iranian oil firm to buy office in Mumbai

Keen on strengthening ties with Iran, the government has allowed National Iranian Oil Company (NIOC) to buy office in Mumbai and is processing requests to allow three of its banks to open branches in the country.
With the lifting of international sanctions, major economies including China and Korea are courting Iran, which has the world's second-largest gas reserves after Russia.
Not to be left behind, India too is keen to raise its engagement with a nation which once was its second biggest oil supplier. Prime Minister Narendra Modi is likely to visit Tehran shortly to bolster ties.
"Permission has been granted to NIOC for purchasing property for an office," a finance ministry official said.

Indian refiners are looking at nearly doubling buying of crude oil from Iran's national oil company, NIOC to 20 million tonnes this year and it having a permanent office would help trade.
Also, Iran has sought permission for three of its banks to open branches in India.

"Bank Pasargad and Parsian Bank want to open offices in India while Saman Bank is interested in opening a subsidiary," the official said. "The Iranian request is being looked into by relevant authorities including the Reserve Bank of India."
The Finance Ministry had in 2012 declined permission to Parsian Bank to open a branch in India apparently due to security concerns and threat of money laundering.

The ministry decision then was based on a report from RBI.
In that year, Home Ministry too had denied security clearance to applications by Parsian Bank and the other two banks fearing threat of money laundering and terror financing in banking transactions as cautioned by the Financial Action Task Force (FATF).
"The applications are being examined," the official said.
Establishment of banking channels is key to Iran regaining the trade it lost due to sanctions. But while the sanctions were listed in January, it still is not able to access past oil dues, including nearly USD 6.5 billion from Indian refiners, as it is yet to be accepted in global banking system.

Iran has ended the three-year old system of getting paid 45 per cent of the bill on selling crude oil to India in rupees and keeping the rest 55 per cent in abeyance for opening up of banking channels.
The official said NIOC has nearly Rs 12,000 crore in the Uco Bank account where it received the rupee payment.
"Iran wants to use this money to settle bills for goods and services imported from India. We have in principal no issues with that provided the transactions are backed by proper invoices and exports from India actually taking place," he said.

The 55 per cent component of oil dues now total to nearly USD 6.5 billion and will be remitted once banking channels are established.
Iran plans to use its bank branches in India to settle not just the oil trade but also that of other commodities.