India will import Crude Oil from Iran despite embargo

India is planning on using escrow accounts of five Iranian banks held with UCO Bank to deposit money for oil purchases to pass by the U.S. sanctions.

With the deposit Iran will use a portion to purchase goods from India to meet expenditure all spending will be in Indian rupees. The anonymous sources stated.

India imports nearly 80% of its annual crude, Tehran offers better credit terms than other Middle East oil producers. Tehran accepts payments in Indian rupees rather than U.S. dollars.

Last year India purchased crude worth about $9 billion. Setting up escrow accounts allows India to continue oil purchases despite sanctions as it fulfills. With the exemption granted by President Donald Trumps to India. Refiners will make payment after the process is in place.

Having multiple escrow accounts will reduce the risks of Iranian bank account being frozen in case the U.S. brings new banks under sanctions.

“We already have 15 Iranian bank accounts, out of these five have come under secondary sanctions,” UCO Bank Managing Director Atul Kumar Goel said Tuesday, adding that the remaining 10 are eligible for bilateral trade between India and Iran. Finance Ministry spokesman D.S. Malik declined to comment.

In 2012 Indian and Iran followed a similar process when the U.S. imposed sanctions.

This will help UCO Bank boost its CASA and profitability,” Goel said, referring to the low-cost deposits. During the previous sanctions also, UCO Bank was solely holding payments for Iranian oil, that swelled the state-run lender’s profit to highest on-record in fiscal year 2013-14. The bank has been reporting losses since Iran sanctions were lifted in 2015.

Iran will use the money to import goods ranging from food to medicines and settled dues in Indian rupees.

Under the exemptions granted by the U.S. India can import up to 300,000 bpd of Iranian’s oil for 180 days.