The State Bank of India (SBI) has denied that it has been pressured by the US to stop honouring letters of credit (L/Cs) issued by Iranian banks.

The denial comes in the wake of a major Indian conglomerate's announcement that it is shelving a major investment in Iran in order to protect its US investments.

Response

The SBI was responding to a report in India's Economic Times that quoted a bank official as saying the "office of foreign assets control under the department of treasury in the US has devised a filter that blocks transactions of blacklisted entities of which Iran is a part."

Other officials later dismissed the report as misinformed. "We treat each country on it's own basis, and our Iran operations have nothing to do with our business in the US," one official said.

US pressure

India's Essar Group recently announced it would pull out of an investment to build a refinery in Iran.

Minnesota governor, Tim Pawlenty, had threatened Essar Steel's activities in the US state. He says that if the company invested in Iran, it could risk subsidies and permits for a US$1.6 billion planned steel plant.

US banks and most major European financial institutions have ceased L/C operations with Iran because of sanctions imposed by Washington on the Islamic republic for its nuclear programme and political interference in the Middle East.

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