Japan banks unlikely to settle India-Iran oil payments

NEW DELHI (Reuters) - Japan is unlikely to allow India to use Japanese banks to provide a clearing house mechanism for India to pay for Iranian oil imports, Japan's deputy foreign minister told Reuters on Tuesday.

Iran has offered India various options to end an impasse on payments, including a choice of currencies and paying on a cargo-by-cargo basis, after India's central bank scrapped a long-standing payment system in December under pressure from the United States.

"I do not think so," Shinichi Nishimiya, deputy foreign minister of Japan said when asked whether Japan would allow its banks to process the payments.

He said Japan would follow global sanctions against Iran, which stands accused by western powers of pursuing a nuclear weapons programme. Iran denies the charge.

Iran is India's second-biggest supplier for crude after Saudi Arabia, exporting about 400,000 barrels per day or 12 percent of the fast-growing Asian country's needs in trade worth some $12 billion a year.

India's outstanding debts to Iran for oil stood at about $2 billion at the end of May.

(Reporting by Henry Foy; Editing by Krittivas Mukherjee)