India may make 45 % of Iran oil payments in rupees

Iran has agreed to accept 45 percent of the payment for its oil exports to India in rupees through UCO Bank, based in Kolkata, the Indian Express newspaper reported on Thursday, without citing any sources.

India, Iran's second-biggest oil client after China, buys 12 percent of its oil needs from the Islamic nation, worth about $12 billion annually.

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Last month, Reuters reported that India would pay for some of its oil imports in rupees via an Indian bank, resorting to the restricted currency after more than a year of payment problems in the face of fresh, tougher U.S. sanctions.

The decision was arrived at last month after talks aimed at ensuring stability in payments between the two nations.

Iran's supplies to India have been fraught with payment problems in the past 13 months after a clearing mechanism was scrapped and refiners have sought alternative supplies.

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India now pays for its daily imports of 350,000-400,000 barrels from Iran through Turkey's Halkbank (HALKB.IS).

Part of the rupee payment will also be deposited in two Iranian private banks, Bank Parsian and Karafarin Bank, that are free of the sanctions imposed on all of Iran's state-owned banks, the newspaper said.

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The two Iranian banks have applied to India's central bank to open branches in the south Asian nation, it added.

India may make 45 % of Iran oil payments in rupees - paper