Iran has agreed upon three Indian banks to accept 45 per cent of payment

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for its crude imports in rupees with both countries formulating mechanisms to avoid any problems in the future in the wake of western sanctions.

Iranian Ambassador to India Seyed Mahdi Nabizadeh today said both countries are determined to resolve the issue of payments for India's crude imports and has given the assurance that there will be no cut in supplies.

The envoy also said that the two side had agreed on part payment in rupees as gold was "not a suitable option".

He accused the US of exerting pressure on European financial institutions, through which India has been routing its payments to Iran for its purchases, not to accept them on the pretext of sanctions.

"Fortunately, a suitable mechanism has been found by the two countries. Officials of both countries met last week and both the Central Bank of Iran and Reserve Bank of India are happy with this arrangement. This mechanism is agreeable to both countries," he told a press conference here.

Under the agreement, 45 per cent of the payments would be made in Indian rupee through three banks and Iran can use the money for buying machinery, metal products, iron, steel, minerals, clothes, fibre, sugar, tea, wood and automobiles in India, among others.

"We have agreed on a part payment in rupees. But, gold is not a suitable option for payment," he said, when asked whether Iran was in agreement if India pays part of its payment in gold.

As part of the payment mechanism, Indian companies will also invest in projects in Iran like developing its oil and gas fields, extraction of iron ore and building roads and railways, the ambassador said.