Commercial banks awaiting guidelines for facilitating business with Iran

Karachi, August 29, 2016 (PPI-OT): The Union of Small and Medium Enterprises (UNISAME) urged the Director State Bank of Pakistan (SBP) Exchange Policy and Regulations Department to give guidelines to commercial banks for facilitating transactions with Iran in persuance to their circular dated February 25th 2016 which very clearly and specifically permits transactions with Iran.

UNISAME in perusal to the circular contacted several banks to enquire the reason for non commencement and were informed that the framework has not been given by SBP and in the absence of the procedure and system they are unable to transact any business with Iran as they need to know the account head to make the respective entries.

President UNISAME Zulfikar Thaver said exports have declined and especially of Basmati rice due to no facilities for transactions with Iran. It is very important that rice exporters are enabled to ship Pakistani Super Basmati rice to Iran . Iranians love Pakistani Super Basmati rice and are very big buyers. The Indian basmati rice is no match for Pakistani rice.

There is huge demand also for denim fabric and since Pakistan is not ready Iran is buying from Turkey.

Despite the permission of SBP and that there is no bar on transactions with Iran yet the banks are not inclined to accept documents related to Iran and therefore business with Iran is at standstill he said. The SME rice processors and exporters are the most affected as value addition to basmati grains is mostly done by the sector.

Thaver further added that It is now crucial that SBP in pursuance of this circular must give guidelines as to how best the banks can facilitate transactions with Iran.

The need is that the commercial banks of Pakistan will have to appoint their correspondents in Iran and secondly the ledger account has to be specified for the exchange of currency from both the buying and selling country.

In other words the modalities and mechanism has to be worked out with the central bank of both the countries to avoid any defects or impediments later on. The commercial banks are afraid as heavy penalties were imposed in the past but now since there is no bar the transactions can be carried out smoothly with the Central banks of both the countries determining the
modus operandi.

Even before there was never a sanction on foodstuffs and medicines and surgical goods but since SWIFT the international currency exchange was declining transactions with Iran the transactions had no route to follow and were therefore resorting to intermediary routes which made it costly.

Now if business is facilitated both the countries can deal directly with one another without intermediaries but the Central banks have to play their role.

He said it is pertinent to note that now is the best time to act as the Iranian astrological new year called Nawroze is in March 2017 and moreover we now have the GI protection law in the process and our competitor India does not have the matching super basmati grains which we have and we have the edge by virtue of the aroma our rice has and yet if we do not act fast it will be very unfortunate.

For more information, contact:
Union of Small and Medium Enterprises (UNISAME)
75/1 3rd Commercial Street,
Phase IV, D.H.A., Karachi, Pakistan
Tel: +92-21-35884225-6
Fax: +92-21-35380642
Cell: +92-300-8245307, +92-321-8245307
Email: unisame@gmail.com

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