"Bank Pasargad has permission to open a branch in Mumbai and we are working to address the remaining issues. Our assets in India could be used as Pasargad's capital – a subject that was discussed with the India’s foreign minister during the joint economic commission meeting in Tehran," IRIB quoted him as saying on Thursday.
Last August, Iran’s ambassador to India, Ali Chegeni, said Pasargad had received all the necessary permits, including from the Reserve Bank of India (RBI) for starting commercial banking in the populous Asian country. RBI is India’s central bank, Financial Tribune reported.
It was announced at the time that banking operations would start in 2-3 months.
"Money transactions are among the key businesses are facing. Solutions have been discussed such as using barter deals and trade in national currencies," Zarif said
He added that trade in national currencies is a “strategic solution” as most countries believe domination of the US dollar in international trade must end.
"It is not possible to remove the dollar overnight… Its dominance should be phased out gradually.”
Both private sector and the two governments should work on using the national currencies, Zarif said.
Iran has proposed to the Indians to launch a bank in Chabahar to facilitate two-way financial transactions.
In the wake of new US sanctions, India may explore the possibility of reviving the rupee-rial arrangement it used in the past for oil imports from Iran.
The presence of an Iranian bank in India is expected to open a major financial channel that will help ensure the smooth flow of funds between the two nations.
The rupee-rial arrangement was used to buy oil from Iran before US sanctions were lifted against Iran’s oil sector four years ago. Under this mechanism, India paid in euros to clear 55% of its dues, while the remaining 45% was handled in rupees.
Prior to the US sanctions oil was the main commodity traded between the two countries. But, after the US imposed new economic sanctions on Iran in November 2018, India started paying for Iranian oil in rupees instead of the greenback.
Customs Data
Data released by the Islamic Republic of Iran Customs Administration show that Iran exported more than $2 billion of non-oil goods to India in the previous Iranian fiscal year (March 2018-19). India was Iran's seventh largest export destination during the period.
Total imports from India were $2.76 billion during the last year. IRICA data show that India was the third top exporter of non-oil goods to Iran.
Iran mainly exported urea, methanol, ammonia, liquefied propane and bitumen. Imports mainly included semi-milled rice, wholly-milled rice, tea, graphic electrodes used in furnaces and paperboard.