Middle East Unrest Delays India Launch of Iran's Bank Pasargad Mumbai Branch

India-Iran Banking Deal Uncertainty

Bank Pasargad, Iran's second-largest private lender, may face further delays in obtaining a Reserve Bank of India (RBI) licence to open a branch in India due to the escalating conflict in the Middle East.

The decision to grant a licence to Bank Pasargad is now unlikely to be taken soon, as the worsening conflict adds uncertainty to the process. The Department of Financial Services and Department of Revenue are analyzing RBI comments on the proposal, which was first mooted in 2018.

The RBI requires clearance from the Ministries of Finance, Home, and External Affairs to grant a licence. An internal document from February 2023 called for expedited comments from relevant departments on the Bank Pasargad matter.

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The proposal to allow Bank Pasargad to open a branch in Mumbai is part of an India-Iran joint declaration from 2018, which endorsed the need for an effective banking channel for business transactions. However, the US imposed sanctions on Bank Pasargad in October 2020, and further expanded sanctions in August 2025 on the bank's tech subsidiary FANAP (Pasargad Arian Information and Communication Technology Company).

The recent escalation of hostilities in the Middle East, following airstrikes by Israel and the US on February 28, has added a fresh layer of complexity to the situation. Iran has retaliated, hitting Israel and several cities in Gulf countries that harbour US bases, plunging the Middle East into its worst crisis in recent memory.

Key Figures:

• Bank Pasargad: Iran's second-largest private lender
• Reserve Bank of India (RBI): India's central bank
• Department of Financial Services: Indian government department
• Department of Revenue: Indian government department
• FANAP (Pasargad Arian Information and Communication Technology Company): Bank Pasargad's tech subsidiary

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