As an emergency measure to bypass United States-led financial sanctions on Iran, the Indian Government is exploring a new payment mechanism for investments in Iran.
Under the proposal, Indian investors can deposit money in rupees whose equivalent amount can be withdrawn in Iran in Rial, instead of other international currencies.
This is a facility available only to Nepal and Bhutan as of now. But the move is similar to the Escrow account that India once maintained with the erstwhile Soviet Union in early nineties to facilitate Rupee-Rouble trade and bypass US sanctions. A similar arrangement is also being worked out with Venezuela as well which too is facing US sanctions.
Sources said the step is aimed to boost investment in Iran and facilitate business through Chabahar. It appears this system is likely to be for non-oil products. While the details of the escrow account is being worked out sources made it clear that no Indian public sector banks are going to be involved in this.
It is unclear whether the Iranian banks will be allowed to open branches here, or Indian banks will open account in Iran or there will be a tie up between India-Iranian banks to facilitate payments. It is learnt that a few Iranian banks have applied to Reserve Bank of India to open branches in India.
India had earlier devised a mechanism of barter system for the payment of oil bought from Iran while a small amount was paid through the UCO Bank, with the permission of US.