India and Iran have resolved a row over how to pay for Iranian crude oil, agreeing to set up a new mechanism to route payments through a German bank, Press TV reported.
The State Bank of India (SBI) will make payments in euros to the National Iranian Oil Company through the Germany-based Europaisch-Iranische Handelsbank (EIH Bank), the Associated Press reported Friday.
Earlier in January, India's Petroleum and Natural Gas Ministry announced that Iran's oil exports to the country were not affected.
Oil companies working with Iran, like Hindustan Petroleum Corp Ltd. and Mangalore Refinery and Petrochemicals Ltd., will make payments to the National Iranian Oil Company's account in EIH Bank in Hamburg via the SBI.
The problem arose when the Indian Central Bank said import payments to Iran would have to be settled outside the existing Asian Clearing Union (ACU) mechanism.
The ACU is a regional payment arrangement used by the central banks of member nations - Bangladesh, Bhutan, India, Iran, Nepal, Pakistan, the Maldives, Myanmar and Sri Lanka.
India imported 21.3 million tons of crude oil from Iran from March 21, 2009 to March 21, 2010.