India set to pay for Iranian oil using rupees

The sources said India has selected UCO Bank and IDBI Bank for facilitating payment to Iran. (File/AFP)
Updated 20 September 2018

India set to pay for Iranian oil using rupees

  • Sources said India has selected UCO Bank and IDBI Bank for facilitating payment to Iran
  • India, Iran's top oil client after China, is still seeking some exemptions to the sanctions from the US

NEW DELHI: India will settle payments for Iranian oil using rupees through local banks starting in November as US sanctions will make it difficult to settle trades through European banks, two industry sources said on Thursday.

In May, US President Donald Trump withdrew from a 2015 nuclear accord with Iran and ordered the renewal of US sanctions. Some sanctions took effect from Aug. 6 while those affecting the oil and banking sectors will start from Nov. 4.

"We are bracing up for any eventuality we have to make a payment and we don't want to default on making payments," one of the sources said.

The sources said India has selected UCO Bank and IDBI Bank for facilitating payment to Iran.

Indian refiners are currently using State Bank of India and Germany-based Europaeisch-Iranische Handelsbank AG to buy Iranian oil in euros. SBI has told refiners it would stop handling Iran payments from November.

The second source said after the United States announced it would re-impose sanctions in May, Iran has already received payments for some cargoes in rupees.

Reuters in June reported that India is looking to revive the its earlier rupee payment mechanism with Iran. During the previous sanctions regime, India adopted a barter-like scheme to buy oil from Iran while the Middle Eastern country used rupees to import goods from India.

"Previously we settled 45 percent of our trade in rupees this time it could be 100 percent. We have to mutually decide the number," said the first source.

India, Iran's top oil client after China, is still seeking some exemptions to the sanctions from the US though some refiners have already curtailed purchases because of insurance issues tied to the sanctions.

IDBI did not respond to requests for a comment while UCO Bank's Managing Director R. K. Takkar did not respond to phone calls seeking comment.


Africa development bank says risks to continent’s growth ‘increasing by the day’

Updated 18 August 2019

Africa development bank says risks to continent’s growth ‘increasing by the day’

  • The trade dispute between US and China has roiled global markets and unnerved investors
  • African nations need to boost trade with each other to cushion the impact of external shocks

DAR ES SALAAM: The US-China trade war and uncertainty over Brexit pose risks to Africa’s economic prospects that are “increasing by the day,” the head of the African Development Bank (AfDB) told Reuters.
The trade dispute between the world’s two largest economies has roiled global markets and unnerved investors as it stretches into its second year with no end in sight.
Britain, meanwhile, appears to be on course to leave the European Union on Oct. 31 without a transition deal, which economists fear could severely disrupt trade flows.
Akinwumi Adesina, president of the AfDB, said the bank could review its economic growth projection for Africa — of 4 percent in 2019 and 4.1 percent in 2020 — if global external shocks accelerate.
“We normally revise this depending on global external shocks that could slowdown global growth and these issues are increasing by the day,” Adesina told Reuters late on Saturday on the sidelines of the Southern African Development Community meeting in Tanzania’s commercial capital Dar es Salaam.
“You have Brexit, you also have the recent challenges between Pakistan and India that have flared off there, plus you have the trade war between the United States and China. All these things can combine to slow global growth, with implications for African countries.”
The bank chief said African nations need to boost trade with each other and add value to agricultural produce to cushion the impact of external shocks.
“I think the trade war has significantly impacted economic growth prospects in China and therefore import demand from China has fallen significantly and so demand for products and raw materials from Africa will only fall even further,” he said.
“It will also have another effect with regard to China’s own outward-bound investments on the continent,” he added, saying these could also affect official development assistance.
Adesina said a continental free-trade zone launched last month, the African Continental Free Trade Area, could help speed up economic growth and development, but African nations needed to remove non-tariff barriers to boost trade.
“The countries that have always been facing lower volatilities have always been the ones that do a lot more in terms of regional trade and do not rely on exports of raw materials,” Adesina said.
“The challenges cannot be solved unless all the barriers come down. Free mobility of labor, free mobility of capital and free mobility of people.”