NEW DELHI - Iran has agreed to India's proposal for a crude oil payment mechanism under which India will pay for 45 percent of its imports from Iran through the Indian rupee, local media reported Wednesday.

This is the first official confirmation of a breakthrough in the India-Iran crude payment dialogue, necessitated by the likely disruption of the current mode of payment through a Turkish bank because of US and EU sanctions, said local daily The Times of India.

Iran's Ambassador to India Seyed Mehdi Nabizadeh said Tuesday both countries were fully satisfied with the new mechanism.

Nabizadeh confirmed that Iran has opened accounts in Indian banks, including UCO Bank, to facilitate the rupee payment.

"Fortunately, Iran's central bank and RBI (Reserve Bank of India) have together arrived at a mechanism which is suitable and agreeable to both the countries,'' Nabizadeh was quoted as saying.

He ruled out the possibility of using gold for payment.

Iran is India's second largest oil provider, with 12 percent of the country's crude oil import coming from Iran.