* India plans to cut Iran oil imports 10-15 pct
* Refiners will cut more if Iran fails to reduce prices
* Bankers not issuing short-term dollar loans for Iran oil (Adds Japan cut plan according to top refiner, releads)
By Nidhi Verma
NEW DELHI, Dec 19 (Reuters) - India plans to cut oil imports from Iran by 10 to 15 percent in the next fiscal year, and more if Tehran does not lower prices to help cover higher costs resulting from Western sanctions, a government source said.
Iran's top Asian oil buyers - China, India, Japan and South Korea - have all reduced imports after the United States and the European Union imposed sanctions aimed at curbing Tehran's nuclear ambitions.
The sanctions have more than halved Iran's oil exports this year, costing Tehran up to $5 billion a month in lost revenue.
"Next year our imports will be 10 percent to 15 percent less than this year," said a government official with direct knowledge of the matter, who declined to be identified because he is not authorised to speak to the media.
"If they don't cut prices, the decline will be substantial. Indian refiners have genuine problems with credit availability."
India, the world's fourth-biggest oil importer and Iran's second-biggest client, relies on outside supplies for 80 percent of its oil needs, or about 3.5 million barrels per day (bpd).
Officials at state refiners said they had yet to receive any directive from the government to cut imports from Iran in the year beginning April 2013, when annual contracts start.
But refiners would probably cut imports anyway because of high costs, the officials said.
The push for cheaper prices is similar to a move by Chinese refiner Sinopec, Iran's biggest buyer, last year. As rising international pressures forced other buyers out of the market for Iranian oil, Sinopec strong-armed Iran into giving it better terms for its annual oil purchases.
The United States wants importing countries to make further cuts in purchases from Iran in 2013 to avoid sanctions, a State Department source said this month.
South Korea has already told the United States it will cut imports by about a fifth from a year earlier in the six months to May, government and industry sources said this month.
On Wednesday, Japan's top refiner said the country's crude oil imports from Iran would be about 15 percent lower next year.
There is no clear indication yet on 2013 imports by China. Daily imports into China in the first 10 months of 2012 were down 22 percent on the 2011 figure.
For the current fiscal - and contract - year, New Delhi had asked refiners to cut purchases from Iran by 15 percent. Refiners have bought more from Saudi Arabia, the top supplier, and Iraq, pushing Iran out of the number two slot.
Banks have refused to issue short-term dollar credit, also known as buyers' credit, for Iranian oil imports because of the sanctions, officials at refiners said.
Indian refiners say Iranian crude has become more expensive because sanctions force them to borrow at high domestic interest rates to finance purchases and face continuing volatility in the rupee against the dollar.
"Economically Iranian oil is not viable. My borrowing cost has gone up," an official at a state-run refiner said.
Starting on Feb. 6, U.S. law will prevent Iran from bringing home its oil export earnings, a measure that will lock up a substantial amount of Tehran's funds, U.S. officials have said.
That could affect the continuation of India's existing payment system with Iran, which settles 55 percent in euros through Turkey's Halkbank. The rest is settled in rupees through a local bank. (Reporting by Nidhi Verma; Editing by Simon Webb and Jane Baird)