India waits for Iran to open oil payments route, says RBI

India is waiting for Iran to tell it how to make payments for oil allowed under last month's deal with global powers on sanctions and will pay in installments, Reserve Bank of India Deputy Governor H R Khan said on Thursday.

Iran can now unlock $4.2 billion of payments for its oil stuck with major clients, including India, China, Japan and South Korea, after it reached an interim deal with six world powers in November over its nuclear programme.

India, Iran's second-biggest customer after China, has been paying for 45 per cent of its supplies in rupees and the rest used to be paid in euros through Turkey's Halkbank until sanctions tightened on that route too earlier this year.

Iranian officials have been in India this week looking at ways to unlock the payments.

"Whether the Halkbank route has been opened or not we are not sure," Khan told reporters on the sidelines of the central bank's board meeting in Kolkata.

"Going forward we will evaluate the proposal and see how best it can be done."

Halkbank has said it could resume payments once the Geneva deal becomes "official.

Access to the funds would bring some relief to Iran's strangled economy and was allowed in return for Tehran's commitment to halting its most sensitive nuclear work.

But Khan said: "not much is going to be paid," and added, "it is not going to happen immediately, it will happen in a staggered manner."

Iran's oil exports have slid to 1 million barrels per day (bpd) from around 2.5 million bpd before sanctions were imposed, partly through constraints on insurance for sales and partly as clients cut volumes to avoid being penalised by Washington.

India wants to import about 220,000 bpd from Iran this year but could fall short of that after insurance problems halted shipments.

It imported at an annual rate of 120,000-130,000 bpd from Iran till November in the year that started April 1, an oil ministry source said last week.

Photograph: Morteza Nikoubazl/Reuters