India to pay $1.65 billion of Iran oil dues via UAE central bank

India plans to pay $1.65 billion of its oil payment dues to Iran through an arrangement with the central bank of the United Arab Emirates (UAE). The amount will be repatriated through Bank Muscat, in Omani currency, reports said today.

Iran, which is under sanctions by the United States and its allies, has reached an interim nuclear deal that has allowed Tehran access to $4.2 billion in blocked funds globally. The proposed payment of $1.65 billion will form part of $4.2 billion that Iran can access now.

Iran had unsuccessfully sought earlier to repatriate $1.65 billion in Omani currency through Bank Muscat.

Under the proposed arrangement, the Reserve Bank of India would buy dollars from authorised currency dealers, instead of the Indian oil buyers tapping the currency market, and transfer the funds to the UAE central bank, which in turn would remit it to Iran in dirhams, reports said.

Iran and six world powers re-launched talks on Tuesday to try to salvage a deal on Tehran's nuclear activity by a 20 July deadline.