The government is likely to resolve the crisis over payment for buying crude oil from Iran by asking Indian companies to open rupee accounts in Union Bank of India.
An Iranian delegation is expected to visit India this weekend to discuss an arrangement under which Union Bank will make payments to Halk Bank in Turkey.
This will be the country's second attempt to find an alternative payment mechanism.
A temporary one was put in place this February, wherein Indian companies made euro payments through Iran's EIH Bank based in Hamburg, Germany. However, Germany later refused cooperation.
Domestic refiners such as Mangalore Refinery and Petrochemicals, Essar Oil, Hindustan Petroleum, Indian Oil and Bharat Petroleum have not received the supply plan for next month from National Iranian Oil Company.
The industry is hopeful the dispute will be resolved by the end of this month.
"We are making all possible efforts to work out an alternative arrangement and a solution is in sight," said an official of a refining company.
The threat of a halt in crude oil supply from Iran has prompted most domestic refiners to sign
Iran meets 12 per cent (about 400,000 barrels a day) of India's annual crude oil requirement.
It has indicated it will stop supply from August if the payment issue is not resolved.
It is the second-biggest crude oil supplier to India after Saudi Arabia.
Indian refiners have not able to make payments for the oil they buy from Iran after the Reserve Bank of India, on December 23 last year, halted the use of a clearing mechanism run by regional central banks.
This was in the wake of pressure from the US, which has been trying to get others to stop trade with Iran.
These sanctions are meant to get Iran to stop its nuclear programme. Indian companies' dues have crossed $7 billion (Rs 31,000 crore).
Iran is now insisting on a payment mechanism before shipping more oil.
Mangalore Refinery and Petrochemicals, which has an annual contract to import 7.1 million tonnes from Iran, owes $2.9 billion (Rs 12,850 crore).
Essar Oil, the second-biggest importer, owes $2.5-2.6 billion.
Another $1.5-2 billion is to be paid by Hindustan Petroleum and Indian Oil Corporation.
