New Channels for Iran Payments

India will deposit payments for crude oil imported from Iran into escrow accounts of five of its banks held with state-run UCO Bank Ltd. after the two nations agreed on a payment mechanism to overcome US sanctions.

Iran will use part of the deposits for purchasing essential goods from India and to meet expenditure incurred by its diplomatic missions in the South Asian nation, people familiar with the matter told Bloomberg. All spending will be in Indian rupees.

Continued supplies is crucial for India, a country that imports nearly 80 % of its annual crude requirement, as Tehran offers better credit terms than other Middle East oil producers and, in the past, has accepted payments in Indian rupees, rather than US dollars. The south Asian nation purchased crude worth about $9 billion from Iran in the financial year that ended in March.

The payment mechanism will allow India to continue oil purchases despite sanctions as it fulfills President Donald Trump’s goal to choke money going directly to Iran. Washington has also granted an exemption for India.

source: Financial Tribune