US bank stalls NIBL payment through Iran

KATHMANDU, FEB 18 -

The US sanctions on Iran have resulted in a payment for bitumen imported to Nepal from Dubai stalling for the last one year.

The payment had to go from Nepal Investment Bank Limited’s (NIBL) account with a US bank to an Iranian bank, which in turn should have paid the bitumen exporter.

Nepal’s Vinira Holding, a bitumen importer, failed to make a payment of $20,000 to its Dubai-based exporter, Bridge Oil Industry, as the City Bank in the US refused to transfer the amount after it came to know that the payment should go through an Iranian bank.

The importer had opened a letter of credit (LC) at the NIBL for the import.

The amount, equivalent of that to be transferred, was also deducted from the NIBL account in the City Bank’s New York branch.

“As the amount to be paid to the exporting party had to be transferred through an Iranian bank, City Bank refused to make the transfer,” said Rajan Amatya, a deputy general manager of NIBL.

According to Amatya, the importer not mentioning the name of the Iranian bank while filling up the LC form resulted in the deduction of the amount from the NIBL’s City Bank account.

“The importer, Rit Gupta, had simply used the swift code of the Iranian bank, which was not identified here and the LC, too, was treated as other normal LCs,” Amatya said. “We would not have tried to make the payment through the US if it was known earlier that it should go through an Iranian Bank.”

If a payment is to be made to Iran, it is done through the Asian Currency Unit (ACU) dollar mechanism. Through the ACU mechanism, dollars deposited in various Asian financial centres are paid to parties concerned.

NIBL said it is trying to get back the amount, both through the US Embassy here and its correspondence bank in the US. It has also requested the Nepal Rastra Bank to help solve the problem.

A senior NRB official said the central bank inquired about a possible solution to the problem with officials of the US Embassy. “They told us that they could take steps to have the cash refunded, but that the amount cannot be transferred to the beneficiary party in Dubai,” the NRB official said.

The central bank has also asked the Finance Ministry to do the needful in solving the problem diplomatically.

Source: Kantipur