India has been, since July 2011, paying in euros to clear 55 per cent of its purchases of Iranian oil through Ankara- based Turkiye Halk Bankasi. Rest of the payments are made in rupees in Kolkata-based UCO Bank. While the euro payments will stop, India will continue to pay for Iranian imports in rupee, the official said.
The new US Treasury sanctions, which go into effect from February 6, bar banks from transferring Iran's oil revenues from importing nations to Tehran.
This means Iran would be forced to keep its oil revenues in local bank accounts in countries purchasing its oil. It can only use those oil earnings to purchase "permissible" services and goods, such as food, medicine and basic medical equipment, from those oil customers as imports back into the Islamic Republic.
"We have some $1.2 billion surplus in the Turkish bank. This will be enough to pay for next two months of crude oil purchase at the agreed rate of paying 55 per cent of the $1 billion a month of purchase in foreign bank," he said.
After March, India will have to pay for entire crude oil purchase from Iran in rupees. And ways will have to be found on how Tehran can use that revenue either by increasing import of food grains or tools and machinery including cars and tractors.