The RBI then announced it would cease to make any payments to Iran under the Asian Clearing Union
India and Iran are both members of the Asian Clearing Union
(ACU), which was designed to promote trade by facilitating payments among the central banks of nine Asian nations: Iran, Pakistan, India, Bangladesh, Myanmar, Nepal, Bhutan, Sri Lanka and the Maldives.
Last week, the Reserve Bank of India (RBI) said deals with Iran must be settled outside the Asian Clearing Union
(ACU) system, used by central banks of member nations to settle bilateral trades.
Subsequent to the Reserve Bank of India s (RBI) discontinuation of old system for settlement of payments through the Asian Clearing Union
method, India makes payments of 55% of the overall cost of its Iranian crude oil imports in euro using Turkish Turkiye Halk Bankasia.
If a new trade settlement system is created-like the Asian Clearing Union
established in Tehran in 1974 or the International Clearing Union proposed at Bretton Woods in 1944-but with BRICS currencies, Iran can use the Rupees or Renminbi [it earns from exporting oil to India and China] to pay Brazil.
It culminated in affecting the Asian Clearing Union
," he told The Hindu.
The Reserve Bank of India (RBI) further curbed transactions with Iran on December 27, saying all current account transactions including trade deals with the Islamic Republic should be settled outside the Asian Clearing Union
Bangladesh and Iran both are members of the eight-member Asian Clearing Union
(ACU) and they settle export and import transactions through ACU payment system.
Business transactions between the two countries through Asian Clearing Union
(ACU) take more time as compared to normal L/Cs, he added.
The Reserve Bank of India (RBI) said last week deals with Iran must be settled outside a long-standing Asian Clearing Union
The official said since the closure of the Asian Clearing Union
(ACU) in December, payments for oil imports from Iran and non-oil exports to the country have been severely affected.
The dispute arose after RBI in December, 2010 refused to clear the payment through the Asian Clearing Union
(ACU) mechanism for paying for Iranian crude oil imports.