A statement issued here by SBP said that Riaz Riazuddin, Deputy Governor of SBP and Ghulamali Kamyab Vice Governor of BMJII signed the agreement on behalf of their respective central banks.
It said that the objective of this BPA is to provide a trade settlement mechanism to promote trade between Pakistan and Iran.
According to the statement, this mechanism will be used for the payment of trade conducted via letter of credit (L/Cs) and in accordance with international laws and regulations.
In the next step, both the central banks will invite banks in their respective jurisdiction to act as Authorized Banks for undertaking trade transactions under this BPA, says the statement.
Details of the mechanism will be issued by SBP in due course, it was further stated.
It said that State Bank of Pakistan expects that this agreement will help in strengthening the trade links between the two countries.
The agreement has been signed just a few days before the 20th meeting of Iran-Pakistan Joint Economic Commission, which is going to be held on 17-18 of April in Tehran.