RBI Mulling Alternative To Asian Clearing Union For Iran Payments
January 08 2011 - 5:38AM
Dow Jones News
The Reserve Bank of India will try to ensure trade payments to
Iran through channels available outside the Asian Clearing Union,
the central bank's deputy governor said Saturday.
"We have to do it within whatever the available channels are.
... We are currently discussing it," Shyamala Gopinath told
reporters on the sidelines of an annual fixed income
conference.
The need for an alternative channel emerged after the RBI late
last month said that all trade-related payments with Iran had to be
cleared outside the Asian Clearing Union, a clearinghouse through
which most India-Iran trade was being conducted.
India's move came amid international efforts to cut off funding
for what the U.S. and others say is Tehran's pursuit of nuclear
weapons.
New Delhi and Tehran have now opted for a temporary channel
wherein Indian oil companies will open accounts with state-run
lender State Bank of India (SBKJY, 500112.BY), which will in turn
deposit the payments for Iranian crude with the European-Iranian
Trade Bank, or EIH Bank.
The new mechanism also may ruffle U.S. feathers as the Treasury
Department blacklisted EIH Bank in September, saying the bank
provided a financial lifeline to Iranian companies that the
Treasury alleges support weapons proliferation.
-By Khushita Vasant, Dow Jones Newswires; +91-22-61456117; nupur.acharya@dowjones.com