TEHRAN – The Central Bank of Iran (CBI) and the State Bank of Pakistan (SBP) signed an agreement on Banking and Payment Arrangement (BPA) aiming to strengthen banking ties between the two countries.

The document was signed in Tehran on Friday by Gholamali Kamyab, the vice governor of CBI and Riaz Riazuddin, the vice governor of SBP, IRNA reported on Saturday.

The BPA aims to provide a settlement mechanism to promote trade between Iran and Pakistan. The mentioned mechanism will be used for the payment of trade conducted via letter of credit and in accordance with international laws and regulations.

According to SBP’s official website, “In the next step, both the central banks will invite banks in their respective jurisdiction to act as Authorized Banks for undertaking trade transactions under this BPA,” Details of the mechanism will be issued by SBP in due course.

Earlier in March, Zubair Tufail, the president of the Federation of Pakistan Chambers of Commerce and Industry, said that Pakistan and Iran would resume banking channels from April “which will pave the way for official trade between the two countries.”

EF/MG