NEW DELHI: Iran will open a branch of its Bank Pasargad in India in the next 2-3 months to help boost trade between the two nations at a time when US economic sanctions have blocked international banking channels.
Ali Chegeni, Iran's Ambassador to India, said Pasargad has received all necessary approvals including from the Reserve Bank of India (RBI) to commercial banking operations.
"It (Bank Pasargad) will start operations in 2-3 months," he said on sidelines of an industry event here.
Oil was the biggest commodity traded between the two countries with India buying on an average USD 1 billion worth of crude oil from the Persian Gulf nation every month.
But, after the US imposed partial economic sanctions on Iran in November last year, India's purchase of oil from the Persian Gulf nation was started in the rupee instead of US dollars.
Indian oil firms paid Iranian oil company in rupees in a Uco Bank account for the oil they bought.
Iran used this money to settle payments for commodity and equipment imports it does from India.
From May, the imports from Iran have completely stopped after full US sanctions came into force.
Chegeni said the reserves in the Uco Bank account are depleting, and opening up of Bank Pasargad will allow settling payments for imports done by Iranian firms.
Bank Pasargad has hired a space in Mumbai and will start operations soon after software for commercial banking is in place.
Iran has been asking India since 2016 to allow its banks to open offices here.
Since March 2012, Iran's banking system had been cut off from SWIFT (Society for Worldwide Interbank Financial Telecommunication) in a bid to intensify the sanctions on Tehran over its nuclear programme.
The US under then president Barack Obama listed the sanctions against Iran in January 2016 after the UN atomic watchdog confirmed that Tehran has met its nuclear obligations under a landmark deal designed to prevent it from developing nuclear weapons.
But, the new regime under Donald Trump has reimposed them.
Besides Bank Pasargad, Parsian Bank is also keen to open representative offices in India while Saman Bank was interested in opening a subsidiary.