India further curbs deals with Iran

(Reuters) - The Reserve Bank of India (RBI) on Monday further curbed transactions with Iran, saying all current account transactions including trade deals with the Islamic Republic should be settled outside the Asian Clearing Union (ACU).

Reuters had reported on Friday that the RBI will not facilitate payments for Iranian crude imports, in another blow to the Islamic Republic’s oil business as global pressure on Tehran grows over its nuclear programme.

“In view of the difficulties being experienced by importers /exporters in payments to /receipts from Iran...it has been decided that all eligible current account transactions including trade transactions with Iran should be settled in any permitted currency outside the ACU mechanism until further notice,” the central bank said in a release.

The ACU involves the central banks of India, Bangladesh, Maldives, Myanmar, Iran, Pakistan, Bhutan, Nepal and Sri Lanka.

Although United Nations sanctions do not forbid buying Iranian oil, the United States has pressed hard for governments and companies to stop dealing with Tehran. Many oil majors and banks have abandoned their dealings since then.

U.S. President Barack Obama visited India last month and said he supported its bid for a permanent U.N. Security Council seat.

The sanctions make it difficult to open letters of credit, which are often required for the buyer and seller of a cargo to guarantee payment upon delivery or at an agreed future date.