KARACHI, July 20: Iran will provide export guarantee to cover the risk of non-payment of all types of credit against the trade purchase by businessmen of both Iran and Pakistan.

According to the Export Promotion Bureau here on Wednesday, the Embassy of Iran had conveyed the establishment of Export Guarantee Fund of Iran (EGFI) which would provide this cover.

This facility will help promote bilateral trade as well as investment in both the countries. The EGFI has been created in accordance with the memorandum of understanding signed at the 15th session of the Joint Economic Commission of Iran and Pakistan.

According to details, the fund will provide a cover to Pakistani exporters against the risk of non-payment of all kinds of credit, including short, medium and long-term credits, and opening of letter of credits (L/Cs) by Iranian buyers.

The EGFI will also provide a cover against the risk on non-repayment of long, medium and short-term credits to be granted by Iranian banks or exporters to Pakistani buyers against opening of documentary credit or obtaining letter of guarantee from banks acceptable in that country.

In addition, the EFGI will provide a cover against the risk on credit granted to Pakistani companies in methods of payment in the form of open account after assessing the credit and establishing ample credibility of the buyers.

The fund will also provide a cover against three types of risks — war, divestment of ownership and limitation in transfer for Iranian nationals in Pakistan.

The EGFI has approved the names of five banks which will be acceptable by the fund for these export guarantee schemes. These banks are National Bank of Pakistan, Habib Bank Ltd, ABN-AMRO Bank N.V, Credite Agricole Indosuez and Deutsche Bank AG.—APP