Circulars/Notifications - Exchange Policy Department  
 F.E. Circular No. 50
December 13, 1995 

All Authorised Dealers
in Foreign Exchange,

Dear Sirs,


Government of Pakistan has provided a Credit of US$ 50 million to Iran for the purchase of Pakistani goods excluding rice.

2. Following procedure has been prescribed for handling transactions relating to exports from Pakistan under the above credit:-

(i) Irani buyers will open letters of credit in favour of Pakistani exporters after obtaining approval from the Central Bank of the Islamic Republic of Iran (CBI) and advise communicate the same to the exporters through an Authorized Dealer in Pakistan. An authenticated copy of CBI’s approval will invariably be sent with the letter of credit.

(ii)In case where letter of credit is opened through cable/telex, No. and date of CBI’s approval will be specified in such cable/telex and an authenticated copy of CBI’s approval will be sent by the L/C-opening bank in Iran to the L/C-advising bank in Pakistan separately.

(iii) The L/C-advising bank in Pakistan will advise the letter of credit to the beneficiaries only after obtaining clearance regarding availability of balance in the credit from the Director, Accounts Department, State Bank of Pakistan, Central Directorate, Karachi through the respective area office of State Bank of Pakistan (SBP). To this end, L/C-advising bank will furnish to the area office of State Bank of Pakistan, a copy of the relative letter of credit.

(iv) All contracts, letters of credit, invoices etc. pertaining to exports under the Credit will be expressed in US$.

(v) The letter of credit opened under this Credit will invariably provide the following clause:-

     "The negotiating bank should reimburse itself from State Bank of Pakistan under Banking Arrangement dated the 27th July,        1995 between State Bank of Pakistan and the Central Bank of Islamic Republic of Iran".

(vi) After shipment of goods, the negotiating bank will negotiate the documents, transmit the same to the L/C-opening bank in Iran and obtain payment from State Bank of Pakistan at the O.D. buying rate obtaining on the date of negotiation. While seeking reimbursement from State Bank of Pakistan, the negotiating bank will indicate the L/C No., amount paid and will also certify that the documents negotiated were strictly in conformity with the terms of the relative of credit.

(vii) The funds available under this credit can be utilized for financing FOB/C&F cost of the goods as also the bank charges, which are for the account of the openers.

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