Iran seeks more banking avenues for trade with India

Sanction-hit Iran, seeking to expand its bilateral trade with India, has approached the union finance ministry and the Reserve Bank of India to allow the country it open accounts in multiple banks to facilitate better non-oil trade between the two nations.

Currently only India's state-owned UCO Bank facilitates transactions with Iran, and these are entirely oil-related. But Iran's ambassador to India Gholam Reza Ansari said in Hyderabad today that his country needs to open accounts in different Indian banks for better non-oil trade between the two countries.

"We want to remove this monopoly of UCO Bank."This is why we are looking for diversifying our banks and make business more competitive. Definitely it would be in the benefit of Indians as well as the Iranians," Ansari told reporters on the sidelines of a interactive programme organized by the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI).

"We request the RBI to give us permission to deal with more Indian banks in this country. This proposal has been given to ministry of finance as well as the RBI," he said.

Since July 2011, India is paying in euros for 55 per cent of its purchases of Iranian oil through Ankara-based Halkbank. The remaining 45 per cent is remitted in rupees in accounts Iranian Oil Company opened in the Kolkata-based UCO Bank.

Tougher Western sanctions on Iran blocked the payments in euros through Turkey from 6 February 2013, but the rupee payments for 45 per cent of the purchases continue through UCO Bank.

"The UCO Bank account is just for oil business, which is nonsense," Ansari said, adding the trade relations between the countries went beyond oil and Iran is keen to look for alternative channels in terms of opening accounts in multiple banks to facilitate more business.

"This is something we are really trying to get it removed which seems to be an obstacle for both promotion and relation between two sides," he said.

Ansari said trade with India may be worth over $15 billion during the current financial year as against over $14 billion in 2012-13. He added that exports from India to Iran are increasing yearly, leading to a healthy balance of trade between the two countries.

On a possible oil import cut by India next year, he said it is up to the Indian government to take decision on the quantity of oil imports; but added that it would be cheaper for India to import crude from Iran due to its proximity.