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.)
SBP’s Directives to Banks
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.
Earlier, 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.
The banking channel between Pakistan and Iran can not be run through Dollar but either Euro or Yen, the SBP Governor said. Economists said the relaxation and lifting of sanctions on Iran by different developed countries have positive outcomes for regional trade between Pakistan and Iran.