India’s central bank asks country’s lenders to effectively curb trade with Iran
MUMBAI: India's central bank Monday asked the country's lenders to effectively curb trade with Iran, a move which is seen as an indication of New Delhi's growing ties with Washington.
The Reserve Bank of India late Monday told the country's lenders to stop processing current account transactions with Iran using the Asian Clearing Union arrangement, a policy which will increase deal costs and make trade cumbersome.
This comes days after the central bank said that all payments for the import of oil or gas should be settled in any permitted currency outside the ACU mechanism on Friday. While the RBI didn't explicitly mention Iran, the Islamic Republic is the only major crude oil exporter inside the ACU. New Delhi is treading a thin line: it is increasingly engaging with the U.S. to satisfy its ambition of playing a greater role in global affairs, but it can't afford to upset Tehran because it depends on them for oil and for support on its dispute with Pakistan over Kashmir.
India is a major oil importer, and brings in $11 billion of crude oil annually from Iran--about 14% of its total crude import bill. The country is India's biggest crude oil supplier after Saudi Arabia.
Also, Oil & Natural Gas Corp Ltd. and other Indian majors are exploring how to develop oil and gas resources jointly with companies in Iran, the world's fifth-largest crude exporter. Explaining its call Monday, the Reserve Bank of India said that the directive to settle Iran trade payments outside the ACU arrangement was determined by "the difficulties being experienced by importers/exporters in payments to/receipts from Iran."
The Asian Clearing Union is an arrangement where the participants settle payments for intra-regional transactions among member central banks, helping economize the use of foreign exchange and transfer costs.
India, Pakistan, Bangladesh, Nepal, Iran, Myanmar, Bhutan, the Maldives and Sri Lanka are members of the union.
The U.S. and other countries have been pressing Iran to reconsid- er its nuclear program, which they say are aimed at weapons production. This has led to a string of international sanctions on Iran's economy and to some foreign companies curbing transactions with Iran.
Last week, the U.S. enacted new financial sanctions against an elite Iranian military unit and the country's largest shipping company, as it intensified efforts to choke Tehran off from the global financial system.
In July, US President Barack Obama signed sanctions which aim to penalize companies which invest in Iran's oil industry and those that export refined petroleum products to it. The European Union later in July banned investments in Iran's oil and gas industry, prohibited Iranian shipping companies from operating within its territory and targeted transactions with Iranian banks, among other moves. - PB News
RIYADH: Mohammed Bucheerei, Ithmaar chief executive and Adel A. El-Labban, AUB Group CEO, with other official during the agreement signing ceremony. -Ap