India tries to pay for Iran oil via Turkish bank

India is trying to make initial payments for oil to Iran through a Turkish bank, Oil Minister S. Jaipal Reddy said on Friday, after the Islamic Republic halted shipments for August over debts which now mount to some $5 billion (Dh18.3 billion). "We are trying to deliver the first tranches [of Iran oil payments] through Turkey," Reddy said. New Delhi has been looking for ways to pay sanctions-hit Iran for 400,000 barrels per day of crude — about 12 per cent of India's demand — since December 2010 when the Reserve Bank of India ended use of a clearing mechanism under US pressure. The two sides could meet in the next week, sources said. Local media have suggested a solution could involve refiners depositing money with the Union Bank of India, which would in turn make payments through Halk Bank in Turkey. Article continues below Sanctions headache There is no ban under US or UN sanctions on India buying Iranian crude, but sanctions have made financing international trade with Iran tough. India exports little to Iran that could be used to offset the value of Tehran's crude exports to New Delhi. Earlier this year, India tried unsuccessfully to persuade Berlin to allow the two countries to settle trade payments in euros through Germany-based Europaeisch-Iranische Handelsbank (European-Iranian Trade Bank). Refiners Bharat Petroleum , Hindustan Petroleum and Essar have bought crude from Iran's regional and Opec rival Saudi Arabia, already India's biggest supplier, to make up some of the shortfall in August.