Indian and Iranian central bank officials have failed to arrive at an agreement over trade payments and will continue their meeting on Monday. The meet was necessitated after the Reserve Bank of India asked banks to stop using the Asian Clearing Union mechanism to clear Iran trade payments. (See: Oil shortage looms as RBI joins Iran embargo)
The move effectively stops settlements in US dollars and the euro, making trade cumbersome.
Officials from central banks of both sides met Friday for discussions and will now meet after the New Year weekend.
India imports about 12 per cent of its oil from Iran and if matters regarding payments are not resolved there are fears the impasse could lead to an oil shortage within the country.
The RBI's hasty move, which apparently was made without consultations either with the oil industry or the government, would mean blocking of imports of 10 million barrels of crude oil contracted from Iran for January. Industry sources aver that will not be easy to replace such a huge supply.
India is Iran's biggest trading partner in business done through the ACU, originally set up by the United Nations in 1974 to help facilitate trade in southern countries of Asia and is headquartered in Tehran.