Iran says India paid all $5 bln oil debt

TEHRAN (Reuters) - India has paid off all oil debts to Iran accumulated this year due to a sanctions-related problem, Iran's Central Bank Governor Mahmoud Bahmani told the official IRNA news agency on Sunday.

"Although all the $5 billion of India's oil debt has been cleared, because of selling oil again Iran will always be a creditor of that country," Bahmani said, adding the payment was received in cash and not in kind through a bartering system.

"So far, Iran has not had a bartering system with India for receiving oil debts but if it happens it would be for those products which are of a high quality and are needed by Iran," he said.

India, Asia's third-largest economy and Iran's second oil buyer after China, racked up the debt after the Reserve Bank of India scrapped a clearing house system last December -- a move welcomed by the United States which is trying to isolate the Islamic Republic over its nuclear program.

Indian companies are making the payments in euros via Turkish state-owned Halkbank, Indian officials have said.

Financial sanctions -- driven by Washington and the European Union which suspect Iran of seeking nuclear weapons, a charge it denies -- are making it harder for Iran to transfer money internationally.

Exchanging goods to pay off debt would be one way to alleviate the problem but would not solve it as Iran's oil exports to India far outweigh the value of its imports.

Bahmani said India was more interested in such a system than Iran.

"Despite the interest of the Indian side to repay its debts with goods and a bartering system, it has not been accepted by Iran," he said.

(Reporting by Ramin Mostafavi; Writing by Robin Pomeroy)