FinMin may replace UCO Bank with IDBI Bank for Iran oil payments

The Finance Ministry may replace UCO Bank with another public sector lender to make its Iran oil payments, BTVi said. 

While no final decision has been made, a Finance Ministry official said that the ministry "favoured" IDBI Bank to replace UCO Bank, BTVi quoted the Newsrise agency as saying. 

India, one of the world's biggest buyers of Iranian crude oil, owed $6.5 billion (nearly Rs ​43,242.9 crore) to the country for crude oil it imported while the Western sanctions were in place. 

A part of the payment was made earlier this year in May, in euros on the request of Tehran, before Prime Minister Narendra Modi visited the country. The payment was made to Turkey's Halkbank.

At the time, India cleared about $750 million, payable to the National Iranian Oil Co (NIOC). The payments were made by Indian Oil Corporation ($250 million) and the Mangalore Refinery and Petrochemicals Ltd ($500 million) through the Union Bank of India.

According to an earlier Reuters report, refiners were holding back 55% of the oil payments to Iran after the route to transfer the month through Halkbank was stopped in 2013, with Western sanctions in place on the country. 

Certain payments to Iran were later allowed after an initial deal for struck to lift the sanctions, the report said.