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Iran has urged India to clear $6.5bn past oil dues within two months partly in rupees and remaining in Euros or dollars, said a top official. Since 2013, the Western sanctions blocked the payment routes and thus oil dues to Iran have accumulated. In an Uco Bank branch, 45% of oil bills are paid in rupees, while remaining amount is pending.

The official said, "The payment will be in at least three installments. The modalities of installments and the route are being worked out.”

If the payment is through Reserve Bank of India (RBI), the oil refiners will hand over the amount to the Central bank, which will be transmitted to Iran. The payment can also be through a government notified gateway.

To receive the rupee payment, Iran will open an account with any of the Indian banks. The new account will be a non-interest bearing account hence, different from the Uco Bank account.

Refiners like Essar Oil and Mangalore Refinery and Petrochemicals (MRPL) have been paying since February 2013 through Uco Bank, Kolkata, in rupees for purchasing crude oil from Iran. Around 45% was paid in this manner while the remaining accumulated due to the delay in the finalization of the route of payment and mechanism.

-Sumana