Iran and Pakistan’s largest banks are taking practical steps to boost letter of credit (L/C) business by opening branches in each other’s country according to the Central Bank of Iran (CBI).

"Pakistani lenders, especially HBL Pakistan, are interested in opening branches in Iran. Therefore, in addition to welcoming this, the CBI is ready to grant the necessary permits," the bank’s governor, Valiollah Seif, said in an official news statement.

L/C business

Seif says Iran is looking forward to expanding bilateral ties based on the Banking and Payment Arrangement (BPA), which was announced during an April meeting between the CBI governor and Pakistan's ambassador to Iran.

The BPA aims to provide a settlement mechanism to promote trade between the two countries and it will be used to conduct L/C business under international laws and regulations.

Banking arrangements

Initially at least one bank from Iran and another from Pakistan would start operations in each other's country.

Bank Melli Iran has already obtained a permit under the BPA from the central bank. Pakistan's largest bank, HBL, and Karachi-based United Bank Limited already have representative offices in Iran.

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