Exporters' body FIEO has requested the RBI to grant permission to Iranian banks for opening branches in India as it could help in facilitating bilateral trade.
According to FIEO Director General Ajay Sahai, five Iranian lenders -- Bank of Pasargad, Saman Bank, Parsian Bank, Bank Mellat and Persia International Bank -- have applied for setting up branches in India.
"We want the RBI to expedite granting permissions for Iranian banks to establish branches in India," Sahai told reporters here.
However, he added, "Let us keep in mind that Iran has not been a very favourable country so far as the RBI is concerned. RBI has its reservations because they are looking at terrorism and other issues".
"The norms which are being followed by RBI for this country (Iran) are a little different than what they follow for others. I am personally of the view that since the sanctions have been lifted, hopefully by January we will see that RBI gives permission to some of them," he said.
Sahai added that the issue of opening branches of Indian banks in Iran has already been taken up.
"Commerce Secretary has already spoken to the chairperson of State Bank of India and UCO Bank. Even IDBI Bank is being encouraged to open a representative office in Iran," he said, addressing an Iranian delegation at a conference.
Sahai said the Federation of Indian Export Organisations (FIEO) has approached the RBI on the issue of granting permission to Iranian banks for opening branches in India.
"This is something which we have referred to the deputy governor of RBI and cited that European Union, which was instrumental in putting the sanctions on Iran, has already provided opening of three branches of an Iranian bank in the city of Munich.
"Therefore India should also come forward and take the lead as the trade opportunities which are coming need to be fructified," Sahai said.
Elaborating on the exports prospects with Iran, he said that India did exceedingly well after the carving out of the rupee payment mechanism in 2012 and 2013 and its bilateral exports rose to close to USD 5 billion in 2014-15.
"Unfortunately, with the softening of crude and commodity prices the exports took a hit in 2015-16. We expect that India's trade to Iran will grow by leaps and bounds particularly now since sanctions have been completely lifted.
"I am aware of some of the challenges which have definitely come in the way of facilitating trade between the two countries. There are numerous issues on the banking front," Sahai pointed out.
Moreover, he said that although a line of credit has been extended by EXIM Bank, the quantum which has been provided is not enough and the products are very limited.
"We have to look into not only extending a large amount of line of credit but looking at the concessional rate which can be provided through these mechanisms," Sahai noted.
He said a feasibility study has been carried out by India on a preferential trade agreement (PTA) with Iran, expressing confidence that "very soon we will be ushering into an era of a PTA with Iran".
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