Banking Arrangement to Fast-Track Iran-Pakistan Trade

The agreement on Banking and Payment Arrangement signed between Pakistan and Iran has been a positive move, which will significantly increase bilateral trade in the foreseeable future, the president of the Federation of Pakistan's Chambers of Commerce and Industry said.

"Within two months, the direct effects of this agreement in business activities between Iran and Pakistan will become evident," Zubair Tufail also told IRNA.

He added that the agreement will create a climate in which official trade between the two countries will go beyond its current threshold of $1 billion.

Riaz Riazuddin, deputy governor of the State Bank of Pakistan, and Gholamali Kamyab, Central Bank of Iran's deputy for foreign exchange affairs, signed the agreement on Friday on behalf of their respective central banks.

Tufail, who is personally involved in negotiations between the two countries with the aim of activating banking channels, says SBP has already started the process of inviting Pakistani banks to cooperate with their Iranian counterparts.

"SBP will introduce three or four banks to start banking interactions with Iranian banks and we hope that the process of opening letters of credit through the banks of both countries will begin in accordance with international laws and regulations within a month," he added.

The official also referred to the 20th meeting of the joint economic commission between Iran and Pakistan, which will take place on Monday and Tuesday in Tehran, adding that it will pave the way for the development of economic and trade ties.

The agreement on free trade, reestablishing financial transactions, bilateral efforts in the energy sector, ways to expand business transactions, combating illegal trade between the countries, increasing the activities of cross-border interactions, strengthening border markets and facilitating the work of traders and businessmen with the aim of boosting trade deals will be among subjects discussed in the two-day event.

In its statement on Friday, SBP said the objective of the arrangement is to provide a settlement mechanism to promote trade between Pakistan and Iran.

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.