India will pay the second tranche of $700 million in oil dues to Iran on Oct. 12, sources said, within weeks of paying a similar amount after a July deal that set the roadmap for the lifting of sanctions aimed at Tehran's nuclear activities.
In August, Iran asked India to release $1.4 billion of the payments it owed in two equal installments, the first of which was paid on Wednesday, Reuters reported.
The payment by the Indian refiners this month will be similar to the first installment, sources said on Thursday.
India is Iran's biggest oil client after China, although New Delhi has reduced purchases under pressure from the sanctions.
As of end-August, Indian refiners owed about $6.6 billion to Iran. Partial payments have been allowed since early 2014.
In the first payment by Indian refiners this week, Essar Oil paid $335 million, followed by $300 million from Mangalore Refinery and Petrochemicals Ltd, $62 million by Indian Oil Corp and $3 million by Hindustan Petroleum Corp.
Indian refiners have been depositing 45 percent of their oil payments to Iran in rupees with UCO Bank since 2012. Tehran uses the funds, currently more than 170 billion Indian rupees ($2.6 billion), on importing non-sanctioned goods from New Delhi.
Refiners have been holding the remainder after a route to pay for oil through Turkey's Halkbank was stopped in 2013 under pressure from sanctions, although payment of some of those funds was allowed after an initial temporary deal.
The sources said HPCL-Mittal Energy (HMEL), which last made purchases from Iran in 2013, will not participate in the payment of the second installment.
Tehran is now India's seventh-biggest supplier of oil, down from the No. 2 spot in the pre-sanctions era.