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Singapore (Platts)--18Oct2010/326 am EDT/726 GMT

Importers of petrochemicals from Iran have resorted to using bank cheques, direct remittance to accounts, escrow accounts and "hawala" transactions used in the Indian subcontinent, to get past the problem of banks delaying or declining to honour letters of credit from Iran, industry sources said Monday. Traders polled across the Middle East and Asia said that they used various payment methods to get around the problem. "Frankly, even if banks in Dubai are ... becoming cautious of opening L/Cs from Iran, we have no problem. We now pay through cheques to Iranian companies. Several other solutions like 'hawala' and payments through an escrow account are also being used," a Dubai based trader said. "Products from Iran are cheaper for us." An escrow account requires the involvement of a third party trusted both by the importer and the exporter. Here, money is put into the account of the third party by the importer of petrochemicals from Iran, and is released to the seller when the consignment reaches him. "Hawala" transactions, popular in India and Pakistan for remitting money through unofficial channels, on the other hand, involves paying the amount to be remitted to an agent in the sender's country. Later, the agent's appointee in the country where the money is to be remitted makes the end-payment. Duba... >>>