ISLAMABAD, Feb 22: Pakistan has granted permission to National Bank of Pakistan (NBP) and Habib Bank Limited (HBL) to open their branches in Afghanistan’s four cities.

Foreign office sources told Dawn on Friday that formal announcement to this effect would be made on the arrival of a high-level Afghan delegation next week. The decision was taken two days ago at a meeting presided over by Finance Minister Shaukat Aziz with the State Bank of Pakistan (SBP) in Karachi, finance ministry sources also confirmed.

The delegation led by Afghan finance minister Hidayat Amin Arsala is scheduled to reach Islamabad on Feb 25 on a two-day visit, foreign office sources said.

The Pakistan banks — NBP and HBL — would initially open their branches in Kabul, Kandahar and Jalalabad and later in Herat. Afghanistan would also open its bank branches in Karachi, Quetta and Peshawar, said the sources and added that two sides would finalise the modus operandi during the visit of Afghan delegation.

Pakistani products worth Rs14 million cross into Afghanistan every day at present through official channels though unofficial trade is many times higher, said these sources.

Notwithstanding that illicit trade would be channelised through the banks that would increase the official volume, the demand of Pakistani products in Afghanistan is increasing as the neighbouring country moves towards normal life, said these sources. Even if the current trend is maintained throughout the year, Pakistan would be earning around $100 million per annum, said a senior official.

These sources said that Finance Minister Shaukat Aziz had very comprehensive meetings with his Afghan counterpart in Tokyo and New York recently. The two ministers had agreed in principle that illicit trade and smuggling going on between the two countries should be contained by formalising the trade through banking channels.

The Afghan finance minister will hold meetings with Pakistani ministers for finance and foreign affairs on Feb 25. The following day, the delegation will hold talks with ministers for communication, petroleum and natural resources, science and information technology, privatisation commission besides the Export Promotion Bureau.