KARACHI: The State Bank of Pakistan (SBP) has signed an agreement with Bank Markazi Jomhouri Islami Iran (BMJII) to facilitate bilateral trade.
The agreement was signed in Tehran, a press release by the SBP said on Friday. ‘An agreement on Banking and Payment Arrangement (BPA) has been signed between the SBP and BMJII,’ it said.
SBP Deputy Governor Riaz Riazuddin and BMJII Vice Governor Ghulamali Kamyab signed the agreement on behalf of their respective central banks.
The objective of the agreement is to provide a settlement mechanism to promote trade between Pakistan and Iran. ‘This mechanism will be used for the payment of trade conducted via letters of credit and in accordance with international laws and regulations,’ the statement said.
Both institutions will now invite banks in their respective jurisdictions to act as authorised banks for undertaking trade transactions under the BPA. ‘Details of the mechanism will be issued by the SBP in due course,’ it noted.