New Delhi to pay directly to third countries from whom Iran purchased humanitarian goods ó food, medicines and medical equipment.
Tehran is now asking for interest on the delayed payments but the RBI said India would not pay any interest as it had been willing to pay since January 2013 but there was no mechanism in place by Iran to remit the outstanding money in foreign exchange.
The tough sanctions slapped by the West on Iran in 2012 closed banking channels for the transfer of oil payments to the Opec member country.
The crisis in Iraq has hurled the US and the EU towards a rapprochement that could end 35 years of hostility with Iran. The signals include moves to strengthen Britainís diplomatic ties with Iran, including reopening its embassy in Tehran after its closure in 2011.