Four months after the scrapping of a long-standing payment mechanism by the Reserve Bank of India (RBI), India has decided to use multiple currencies, including the rupee, to pay for crude oil imports from Iran.
In addition to the rupee, the euro would also be used for a part of the 12-million barrels of oil imported from Iran every month, but some payments would be routed through countries like Turkey, according to sources privy to the development.
One of the sources said the finance ministry was preparing a note for the cabinet for payments for Iranian oil in currencies, including the rupee.
Under the proposal, the National Iranian Oil Co (NIOC) would open a rupee account with Indian banks for purchase of non-strategic items like railway imports and buying commodities.
It cannot use the money for making investments in India or buying shares or companies, but could be used for buying government securities, the sources said.
The ministry is preparing a list of what Iran can do with the money and what it cannot.