Banks, FIs allowed to do business with sanctions-free Iran

WEB DESK: State Bank of Pakistan (SBP) on Thursday announced that it is lifting banking sanctions on Iran and allowed banks and Financial Institutions (FIs) for commencement of normal business/banking activities within the scope of a UN resolution. With lifting of sanctions, banks and FIs can resume banking channel linkages with Iranian banks, besides issuing E-form and opening of Letters of Credit (LCs) for trade with Iran.

In line with the Federal Government’s decision to implement the United Nations Security Council (UNSC) Resolution 2231 (2015) dated July 20, 2015 regarding lifting of sanctions on Iran, the State Bank of Pakistan on Thursday communicated to banks/FIs that previous sanctions on Iran have been removed and normal business activities can be commenced within the scope of the resolution.

State Bank, however, has advised banks/FIs to remain mindful about the activities and persons that continue to remain on the UNSC list, as well as the currencies or financial systems which are subject to certain restrictions. SBP is expecting that the lifting of sanctions and restoration of banking channels between Pakistan and Iran would revive normal trade and business activities between the two neighbours.

Few years back, the US imposed a broad range of sanctions against Iran in the context of nuclear program and since then banking channel with Iran was suspended and accordingly Pakistani banks were reluctant to do business with Iran. Following the US sanctions, the bilateral trade between Pakistan and Iran reached almost zero level. After the sanctions, several Pakistani traders were trading with their Iranian counterparts through Dubai; however, this too could not last longer due to UN sanctions on Iran.

In the July last year, the UNSC had announced to lift the sanctions on Iran and since then Pakistani business community was asking for opening of formal banking channel with Iran to boost the bilateral trade between two neighbouring countries. Bankers said that there are significant opportunities for Pakistan to enhance bilateral trade, investment and economic cooperation with country Iran. “SBP has taken a very timely decision,” they added.

Harron Agar, leading trader, and former president Karachi Chamber of Commerce said that the absence of a banking channel had badly affected the bilateral trade with Iran and the SBP’s move would help facilitate the business community in terms of secured bilateral trade transactions.

“We are expecting that bilateral trade between Pakistan and Iran will reach over $3 billion over the next few years, as Iran is much cheaper than other countries,” he added. Major importing products will be chemical, plastic, pulses, milk, LPG, petrol and ceramics. While, Pakistan can export paper and paper board, rice, fruits, surgical items and sports goods, he mentioned. Waheed Ahmed, Chairman All Pakistan Fruits and Vegetable Exporters Importers and Merchants Association (PFVA) said that Pakistan can export over 75 million dollar worth of fruits and its allied value-added products to Iran. He said SBP’s step would greatly benefit the Pakistan’s economy.

Source:Business Recorder