India ‘begins settling Iran oil dues via Germany’s EIH bank’

Refiners in India, Iran’s top oil buyer after China, last month resumed settling their back debt of about $6.6 billion after the lifting earlier this year of some of the sanctions against Tehran had opened up oil trade and banking channels.

The first payments were handled in May by state-run Union Bank of India via Turkey’s Halkbank, which had previously handled payments before tougher European sanctions were put in place in February 2013.

But Union Bank has asked the refiners to raise their credit limits or deposit money in rupees a day ahead of initiating payments, sources familiar with the matter said, and refiners were fearful of delays in working down their oil debt.

Timely payment of the Iranian dues is crucial not only for future crude supplies but also for winning investments in Iran that would strengthen trade ties between New Delhi and Tehran.

From June, refiners have been making payments through State Bank and EIH, said government and company sources with direct knowledge of the matter, which should be quicker since most of the refiners have their main accounts at SBI.

A senior official at the Union Bank of India confirmed that his bank was no longer handling Iran oil payments, declining to provide further details.

No comment was available from Turkey’s Halkbank, and EIH did not immediately respond to a request for comment.