FIEO urges RBI to grant Iranian banks access to open branches in India

The Dollar Business Bureau

Trade body FIEO has urged the nation’s central bank to allow Iranian banks to open their branches in India, which would help in facilitating trade.

Speaking to the media, FIEO Director General Ajay Sahai said, “five Iranian lenders Bank of Pasargad, Saman Bank, Parsian Bank, Bank Mellat and Persia International Bank have applied for setting up branches in India. We want the RBI to expedite granting permissions for Iranian banks to establish branches in India.”

However, he added, “Let us keep in mind that Iran has not been a very favourable country so far as the RBI is concerned. RBI has its reservations because they are looking at terrorism and other issues”. The norms which are being followed by RBI for this country (Iran) are a little different than what they follow for others. I am personally of the view that since the sanctions have been lifted, hopefully by January we will see that RBI gives permission to some of them,” he said.

“Commerce Secretary has already spoken to the chairperson of State Bank of India and UCO Bank. Even IDBI Bank is being encouraged to open a representative office in Iran,” he said, addressing an Iranian delegation at a conference.

“This is something which we have referred to the deputy governor of RBI and cited that European Union, which was instrumental in putting the sanctions on Iran, has already provided opening of three branches of an Iranian bank in the city of Munich.

“Therefore India should also come forward and take the lead as the trade opportunities which are coming need to be fructified,” Sahai said.

Sahai was optimistic when he elaborated on the export prospects with Iran. He said that India did exceedingly well after the carving out of the rupee payment mechanism in 2012 and 2013 and its bilateral exports rose to close to $5 billion in 2014-15.

“Unfortunately, with the softening of crude and commodity prices the exports took a hit in 2015-16. We expect that India’s trade to Iran will grow by leaps and bounds particularly now since sanctions have been completely lifted.

Sahai said he was aware of the issues that could come on the banking front, and reiterated that there were challenges which could come in the way of facilitating trade between the two countries, but then things can be sorted out.