Circulars/Notifications - Exchange Policy Department  
 FE Circular No. 04 of 2017

May 09, 2017



The Presidents/Chief Executives of all
Authorized Dealers in Foreign Exchange

Dear Sirs/Madam,


Mechanism for Settlement of Trade Transactions between Pakistan and Iran

In order to facilitate trade between Pakistan and Iran, State Bank of Pakistan (SBP) and Bank Markazi Jomhouri Islami Iran (BMJII) have devised a payment settlement mechanism to settle the trade transactions between the two countries. The said mechanism will be available as an additional mode and does not restrict the use of other permissible mechanisms for settlement of the trade transactions as per instructions issued by SBP from time to time. Key features of this mechanism are as under:

  1. This mechanism will be available for the payment of goods and services traded between Pakistan and Iran.
  2. Transactions eligible for settlement under this mechanism will be denominated in Euro or JPY and based only on documentary Letter of Credits (L/Cs) conforming to the Uniform Customs and Practice for Documentary Credits UCP 600 published by the International Chamber of Commerce (ICC).
  3. The modus operandi for processing of transactions under this mechanism will be as under:

    a) Payment of imports by Pakistan: Importer’s bank in Pakistan will credit the foreign exchange (i.e. amount due under L/C) in Nostro account of SBP for onward payment to the exporter in Iran and inform the same to SBP as per format attached as Annexure-A. On confirmation of receipt of funds in Nostro account, SBP will instruct BMJII to pay the exporter's bank for onward payment to exporter in Iran.

    b) Receipt of funds against Exports from Pakistan: On receiving payment instructions from importer’s bank in Iran, BMJII will instruct SBP to make payment in Pakistan. SBP, on receiving the instructions from BMJII, will credit the Nostro account of exporter’s bank in Pakistan in FCY.

  4. Participating banks shall ensure that transactions conducted under this mechanism are not proscribed and do not involve individuals/entities proscribed under international sanctions.
  5. Execution of transactions under this mechanism will be subject to compliance of all applicable foreign exchange rules and regulations.

The Authorized Dealers, interested to work under this mechanism, are advised to send their written consent to the Director, Domestic Markets & Monetary Management Department, State Bank of Pakistan, Karachi latest by May 31, 2017.

In case of any query, please contact Mr. Athar Ghafoor, Additional Director at 021-99221480 or email [email protected]

 

 


Yours truly,

Sd/-
(Fazal Mahmood)
Director


Back to Circular Page / Home Page
       
Home
About SBP
Publications
Economic Data
Press Releases
Circulars/Notifications
Laws & Regulations
Monetary Policy
Help Desk
SBP Videos
Feedback
Contact us
What's New?
Speeches
Online Tenders
Web Links

Educational Resources
Regulatory Returns
Library
Rupey ko Pehchano
Events
Zahid Husain Memorial Lecture
Careers
Sitemap
 
Best view Screen Resolution : 1024 * 768
Copyright © 2016. All Rights Reserved.