Trade boost: Iran for removal of banking restrictions with India

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SummaryProposal to allow Parsian Bank to open a branch in India discussed.

Iran is keen to remove restrictions on banking with India and is hopeful the Reserve Bank of India will address the issue as the two countries try to increase trade, particularly oil imports by India.

“Trade without removing banking restrictions will not grow...we can have more trade (only) if this is solved. The Indian government should facilitate it,” Iran’s industry minister Mohammad Reza Nematzadeh told The Indian Express.

The issue is understood to have been discussed in bilateral talks on Wednesday between commerce minister Anand Sharma and Nematzadeh on the sidelines of the World Trade Organization summit.

This is the first meeting between the two countries after Iran struck a compromise with the US and five other nations on its nuclear programme.

Sources said India’s bilateral talk with Iran focussed on its need to maintain energy security and acquisition of oil fields as well as its strategic position that allows connectivity to Central Asia and Afghanistan.

Iran has also sought for Indian banks to work on letters of credit from India to boost trade as well as normalisation of the payment channel between the two countries for crude oil imports.

Removal of banking restrictions, Nematzadeh said, will also help Iran receive the 55 per cent balance of payments for crude oil payments that are currently with India. Instead, he said, these should be deposited in Euro in a bank in a third country.

The minister is also hopeful that the issue of sanctions on Iranian shipping companies with Iranian insurance will soon be “resolved” and further help trade between the two countries. A proposal to allow the Tehran-based Parsian Bank to open a branch in India was also discussed.

India is Iran’s second largest crude oil importer. Trade between the two countries touched $15.8 billion in 2012 with imports from Iran consisting of a major chunk at $13.27 billion.

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