An agreement on Banking and Payment Arrangement has been signed by the State Bank of Pakistan and the Central Bank of Iran in Tehran on Friday.
Riaz Riazuddin, deputy governor of SBP, and Gholamali Kamyab, CBI’s deputy for foreign exchange affairs, signed the agreement on behalf of their respective central banks, SBP reported on its website.
According to the statement, the objective of BPA is to provide a settlement mechanism to promote trade between Pakistan and Iran. This mechanism will be used for trade payments conducted via letter of credit and in accordance with international laws and regulations.
It added that in the next step, both the central banks will invite banks in their respective jurisdictions to act as authorized entities for undertaking trade transactions under the BPA. More details of the mechanism will be issued by SBP in due course. State Bank of Pakistan expects this agreement to help strengthen trade links between the two countries.
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