Pak­istan's banks ex­plor­ing Iran to set up chan­nels

The Pak Banker - - FRONT PAGE - Muham­mad Yasir

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.

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