RBI keen on finding solution to Iran payment crisis

Friday, 31 December 2010, 05:06 Hrs
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Bangalore:The Reserve Bank of India (RBI) Thursday favoured an early solution to the Iran payment crisis as it may affect Iranian crude imports to India.

"We have to find an early solution to the payment crisis, which is an international problem and not limited to India or Iran," RBI deputy governor K.C. Chakraborty told reporters here.

The deputy governor's remarks come in the wake of the central bank Monday barring Indian oil marketing firms from using the Asian Clearing Union (ACU) to pay for crude and gas imports from Iran.

"Governments and central banks of both the countries (India and Iran) have to sort out the issue as businesses have to know how transactions will take place," Chakraborty said on the margins of a bank function on the outskirts of the city.

In a related development, Petroleum Secretary S. Sundareshan told reporters in New Delhi that officials of the RBI and the Iranian central bank would meet in Mumbai Friday to discuss the issue.

"We are working on an alternate settlement mechanism. It is being discussed with the ministry of finance and a solution will be found in the course of the next few days," Sundareshan said.

"Alternate mechanism payments could be in any currency, Japanese yen or their local currency," Sundareshan added.

India is Iran's second largest importer of crude, having bought 21 million tonnes in 2009-10.

The US Wednesday praised the RBI's move to reduce dealings with Iran's central bank.

The ACU, with India, Pakistan, Bangladesh, Bhutan, Maldives, Nepal, Sri Lanka, Myanmar and Iran as member countries, settle payments for intra-regional transactions among participating central banks on a multilateral basis.

The RBI's sudden move to bypass the ACU route to settle dues follows the decision of the American and European banks not to process payments for Iranian fuel supplies.

The RBI deputy governor was on a day's visit to Bangalore to inaugurate the Corp Grameen Vikas Kendra, a branchless banking unit of state-run Corporation Bank at Mallohalli village in Doddaballapur taluk in Bangalore rural district.
Source: IANS
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