Pakistan's banks exploring Iran to set up channels
Pakistan's banks are keen to establish channels and networking with Iran's banking industry as bankers visited Iran to exploring different opportunities in the neighboring country.
According to industry sources, a delegation of Meezan Bank led by Deputy CEO of Airful Islamic paid a visit to Iran to meet officials of different banks in Iran whereas delegation of Bank Alfalah and Summit Bank is on the way to explore opportunities in Iran to set up their branches in neighboring country.
A high level of delegation of Meezan Bank met different bankers of Iran mainly in setting up banking channels in order to provide facilities to traders for Letter of Credit (LC) and money transactions, said a senior banker at Meezan Bank said. Setting up branches will be the next move but it will take time as policies need to be sustainable further to build confidence of Pakistan's banks in Iran. We have doubts that sanctions might be imposed again on Iran by different countries hence branches network will be established later on. Besides, the banking system of Iran is Islamic but different operational which needs to be conformed with Pakistani banking system for carrying out transactions, he added. The State Bank of Pakistan is likely to devise its banking policy for setting up formal banking channels between Iran and Pakistan after the Federal Government lifted sanctions on the neighboring country in tandem with United Nations Security Council (UNSC) Resolution 2231 (2015.)
Earlier this month, the central bank has communicated to banks and financial institutions that previous sanctions on Iran have been removed by the Federal Government which paved the way towards commencement of normal business activities between the two countries within the scope of the resolution adopted in United Nations. According to an estimate, trade between Pakistan and Iran peaked at $ 1.32 billion in 2008-2009 but subsequently declined and is presently around $ 893 million. It is expected that the lifting of sanctions and restoration of banking channels between Pakistan and Iran would revive normal trade and business activities between the two neighbors, the central bank stated.
Banks/FIs have been advised to remain mindful about the activities and persons which continue to remain on the UNSC list, as well as the currencies or financial systems which are subject to certain restrictions.
Ashraf Wahra, Governor SBP said that the central bank could set up banking channels with Iran within two weeks with the go-ahead of the Ministry of Finance, which is responsible for rolling out the policy pertaining to the neighboring country on the behalf of the Federal government. Establishing a network of Pakistani banks in Iran and Iranian banks in Pakistan will take some time, mostly one to two years, but things could be done easily and smoothly without major issues except the currency.