NEW DELHI: State Bank of India , the nation's largest lender, on Saturday said it is ready to facilitate payments for Iranian crude oil but is awaiting notification of a bank that is not under the US sanctions which can receive payments.
"Payments are not being routed (currently) because there is no arrangement (to receive money at Iranian end). Iranians have to line up a bank," SBI Deputy Managing Director and Group Executive for International Banking Pratip Chaudhuri said on the sidelines of the Pravasi Bharti conference here.
SBI has refused to issue fresh Letters of Credit (LCs) to public and private sector refiners who import some 12 million barrels of crude oil from Iran every month after RBI clamped down on the main conduit Indian companies use for paying Iranian oil.
"Right now, they are not able to pay for oil not because we are afraid of the sanctions or something but because they are not able to designate a suitable bank which would receive the payment on their behalf," he said. "Once that it done, the rest of the thing can be taken care of."
The Reserve Bank of India on December 23 said that all trade-related payments with Iran had to be made outside the Asian Clearing Union (ACU), a regional clearinghouse through which most India-Iran trade was being conducted.
Earlier this week, India and Iran had agreed to route payments through Hamburg-based European-Iranian Trade Bank AG (EIH), an Iranian bank that is already under US sanctions. It was said that SBI could transfer money from its Frankfurt branch to the bank but SBI has so far refused to play ball, fearing it could face sanctions by the US.
"EIH is also under sanction, we cannot deal with any kind (of bank) under sanction," Chaudhuri said.
EIH has not been sanctioned by the United Nations or the European Union . But in September, the US Treasury blacklisted the bank, saying it provided a financial lifeline to Iranian companies that it alleges support weapons' proliferation.
A finance ministry official said SBI would take suitable precautions to avoid possible US sanctions due to any dealings with the blacklisted EIH. "The LCs means an unconditional promise to pay at a future date. How can we pay at a future date. The Iranians have to engage a receiving bank. They should supply crude based on contract," he added.
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