Citing security concerns, home ministry refuses entry to Iranian bank branches

The home ministry has refused permission to three Iranian banks to open branches in the country over concerns of money-laundering and terror financing, according to a report published today.

Analysts say the move would add to the government's difficulties as it seeks to settle payments for its oil trade bills with the Islamic Republic, The Indian Express  reported quoting an unnamed home ministry official.

According to the newspaper, the ministry had denied security clearance to applications by Parsian Bank, Bank Kasargad and Eghtesad-e-Novin Bank in view of its obligations concerning money laundering and terrorist financing.

The home ministry has meanwhile offered no comment. India is expected to import 15.5 MMT of crude oil from Iran this year and has found it difficult to find banks to transfer payments to the country, due to US-led financial  sanctions against it.

To work around the sanctions, India and Iran clinched a deal under which India would pay for around half of its Iranian oil purchases in rupees.

Letting Iranian banks set up branches in India would have made it easier for firms to boost rice, tea, yarn, fertiliser and textile exports to Iran as also facilitate cooperation on engineering and other projects.