KARACHI: The State Bank of Pakistan (SBP) invited banks on Monday to discuss the progress made on commercial relations with Iran after the lifting of international sanctions on the country.

Recently the SBP directed banks to normalise business activities with Iran. However, banking sources informed of slow movement in the said direction.

Financial circles aware of development regarding Iran said that no bank has so far been approached for banking transaction with businesses in Iran.

Usually, the National Bank of Pakistan (NBP) leads others, however, it has also not taken any concrete step this time around, sources said.

Bankers believe there is a lot of scope for the development of trade between the two countries.

The SBP has advised all banks to take immediate measures for updating their policies, procedures, systems and controls, restoration of communication channels and agreements with their counterparts in Iran for early recovery of normal trade and business activities.

Unlike Pakistan, India has been active as it maintained good trade relations when the country stood isolated because of UN sanctions. It played a role in building Port of Chabahar in Iran.

India adopted a rupee-based payment mechanism with Iran to skirt Western sanctions that prohibited purchases from Iran made in dollars.

Under that system, India purchased Iranian oil with rupees by depositing the payment in an Indian state-run bank account, from where Iran would use funds to buy Indian goods, including food, drugs, consumer products and auto parts.

Moreover, Indian rice exporters expressed hope that high-quality basmati rice sales to Iran would rise to one million tonnes in 2016.

“Pakistan will have to work harder in gaining foothold in Iranian market”, commented an analyst. Trade between the two countries shrank to its lowest levels in FY15, comprising just $31.4m exports and $271,000 imports.

Published in Dawn, March 15th, 2016