India, Iran Drop The Petrodollar

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India, Iran drop the petrodollar

Iran and India have made plans to ditch the petrodollar in favour of using rupees for future crude oil trades. reports:

Since 2013, Indian refiners have been depositing 45 per cent of their oil payments to Iran in rupees with UCO Bank and withholding the remainder after a payment route through Turkey’s Halkbank was stopped under US and European sanctions.

The payment agreement needs amendment as tax exemption is contingent on the pact notified by the Centre in January 2012 which allows only 45 percent of oil payments in rupees. Budget 2012-13 exempted Indian refiners from withholding 40 per cent tax while paying NIOC.

Sources said IDBI Bank, which is also highly insulated from global sanctions due to lack of overseas presence, would be authorised to open a joint account in which $4 billion would be parked for non-oil imports.

The remaining $2.5 billion would be deposited in UCO Bank. “One option being considered is to provide a $150 million loan to Iran for the development of Chabahar port through UCO Bank,” said sources.

Sources added that Iran also plans to use these rupee deposits in Indian banks as collateral for printing more rials through its central bank. And once the sanctions are lifted, they said, a large share would be transferred to Iran through conversion in Euros.

The currency switch policy is part of the offensive by both countries ahead of a significant surge in trade once the sanctions are lifted. Keeping that in focus, two are preparing a Preferential Trade Agreement and working on increased connectivity in banking sector for which India’s finance ministry has approved that Iran be removed from the sensitive list.

Sean Adl-Tabatabai
About Sean Adl-Tabatabai 17769 Articles
Having cut his teeth in the mainstream media, including stints at the BBC, Sean witnessed the corruption within the system and developed a burning desire to expose the secrets that protect the elite and allow them to continue waging war on humanity. Disturbed by the agenda of the elites and dissatisfied with the alternative media, Sean decided it was time to shake things up. Knight of Joseon (