(Recasts with details on export guarantees)

VIENNA, Sept 28 (Reuters) - Austria agreed on Wednesday to significantly increase its export guarantees for deals with Iran during a visit by the Islamic Republic's central bank chief, two people familiar with the matter said.

It will raise the total amount of guarantees that Oesterreichische Kontrollbank , the body responsible, can provide to roughly 1 billion euros ($1.1 billion) from more than 200 million euros, the people said.

"It is about saying that it is possible to do significantly more than before," said one of the people, who spoke on condition of anonymity because the talks between Iranian and Austrian officials were confidential.

The increase follows a series of memorandums of understanding involving companies in sectors including steelmaking and healthcare that were signed during a visit by Iranian business leaders in March.

Tehran has complained that despite a nuclear deal with major powers that lifted many sanctions against it, large banks are unwilling to do business with Iran for fear of falling foul of U.S. sanctions that are still in place.

Its central bank chief told Austrian news agency APA that European firms should encourage the U.S. authorities to honour the deal. He met on Wednesday with his Austrian counterpart and executives from banks including Erste Group and Raiffeisen Bank International , people familiar with the matter said. ($1 = 0.8920 euros)

(Reporting by Francois Murphy and Kirsti Knolle; Editing by Alison Williams) ((kirsti.knolle@thomsonreuters.com; +43 1 53112 255; Reuters Messaging: kirsti.knolle.thomsonreuters.com@reuters.net www.reuters.com ))