India plans to clear some pending oil payments to Iran through the United Arab Emirates central bank, three sources with knowledge of the matter said, under an interim nuclear deal that has allowed Tehran access to $4.2 billion in blocked funds globally.

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Iran and six world powers re-launched talks on Tuesday to try to salvage a deal on Tehran's nuclear activity by a July 20 deadline.

Iran's earlier request to repatriate $1.65 billion in Omani Rials through Bank Muscat proved not to be workable. It was not known why that channel was not utilized.

Under the proposed new arrangement, the Reserve Bank of India would buy the dollars from authorised currency dealers, instead of the Indian oil buyers tapping the currency market, the sources said. No immediate comment was available from the RBI. The UAE central bank would then remit the funds to Iran in dirhams, the sources said.

The UAE central bank and the US Treasury department's Office of Foreign Assets Control did not immediately respond to requests for comment.