NEW DELHI, Feb. 7 (UPI) -- New Delhi agreed to set up a payment mechanism for Iranian crude oil through a German bank, a source in the Indian finance ministry said.
Tehran was selling crude oil to India on credit because the Reserve Bank of India closed the Asian Clearing Union in December. The ACU was used to buy crude oil from Iran, though New Delhi faced financial hurdles because of U.S. economic sanctions targeting Iran's energy sector.
A source in the Finance Ministry in India said both sides agreed to set up a new mechanism for crude oil payments through German bank Europaeisch-Iranische Handelsbank AG, reports Bloomberg News.
EIH would receive euros for the Iranian crude provided Indian importers issue notes saying the money wouldn't be used for sanctioned goods.
The decision came as U.S. lawmakers complained to EIH in a letter that the bank was enabling Iran go forward with its nuclear ambitions.
EIH was sanctioned by Washington in September for facilitating Iran's proliferation activities.
U.S. Sen. Frank Lautenberg, D-N.J., and 10 other U.S. lawmakers warned EIH before the deal that any activity with Iran had consequences.
"Companies that continue to conduct trade with Iran via EIH also face potential sanctions in the U.S., including restrictions on exports to the U.S. and access to U.S. capital markets," their letter read.