India is one of the biggest buyers of Iranian crude and built up a payments backlog when Iran was under western sanctions, with its refiners owing about $6.5 billion to Iran. They cleared around $770 million in euros through Halkbank to the National Iranian Oil Co (NIOC) in May.
“As per the instructions of the Central Bank of Iran, the local banks in India will transfer the money to Halkbank,” Sadegh Akbari, Iran’s general director for foreign economic relations, told reporters at a conference in Istanbul.
Asked when the remaining funds would be cleared, he said “in a short period of time” but declined to comment further.
The refiners had been holding back some payments to Iran after a channel through Halkbank was closed in 2013, although payment of some of the funds was allowed after an initial temporary deal to lift sanctions.
Last week, on the basis of an advisory from the Reserve Bank of India, India’s oil ministry wrote to refiners saying the remaining dues can be settled in three months from May 30.
It told companies to stagger payments and ensure foreign exchange demand was limited to $500 million per week in a bid to avoid volatility in the forex market.