Iran wants to use the rupee payments it receives for exporting oil to India to buy government securities as well as for financing its imports from third country. After RBI scrapped a long-standing mechanism of settling payments through the Asian Clearing Union mechanism, India pays 55 per cent of the value of oil its imports from Iran in euro payments through Turkey's Turkiye Halk Bankasia. The balance 45 per cent of crude payments are made in rupees through UCO Bank. Under the rupee payment mechanism, 45 per cent of the oil import bill from Iran is credited in rupees in the accounts of Iranian Banks maintained with UCO Bank. Sources said these rupee resources are being used for making payments for Indian exports, including project exports, to Iran. But since Iran buys goods worth less than half of the rupee payment, it wants to use balances to finance third country imports. The operational modalities have to be discussed and agreed between the two sides, they said. In 2011-12, India bought crude oil worth USD 13.5 billion from Iran while it exports to the Persian Gulf nation was around USD 2.4 billion. At these levels, Indian oil companies would pay over USD 6 billion to Iran in rupee. Also, Iran wants to be paid interest on the balances in the rupee vostro accounts of Iranian banks with UCO Bank. Vostro is an account that one party holds for another. In addition, Iran wants permission for placing the rupee balane as deposits with UCO Bank and purchasing government securities, sources said.

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