Russian Banks Start Processing Iranian LCs

Banks in Russia have started processing letters of credit (LCs) issued by Iranian banks amid growing trade and economic cooperation between the two countries.

Central Bank of Iran’s deputy governor for foreign exchange operations said on Sunday that two banks in Russia had agreed to accept Iranian-issued LCs to help facilitate trade between Iran and Russia.

Alireza Gachpazzadeh said that the new arrangement would boost Iran’s ability to import basic goods, especially agricultural staples, from Russia. Gachpazzadeh said a third Russian bank may follow suit and start processing LCs issued by Iranian banks in the near future.

An LC is a document issued by a bank guaranteeing a buyer’s payment to a seller. The decision in Russia to accept LCs issued by Iranian banks would significantly reduce the costs of imports for Iranian businesses.

The measure comes amid growing economic and trade cooperation between Iran and Russia as the two countries seek to reduce the burden of Western sanctions on their economies. Tehran and Moscow have also expanded their banking relations in recent years as part of efforts to accommodate growing volumes of bilateral trade. Russia’s second-largest bank, the VTB, announced in January that it would upgrade its representative office in Tehran to a branch, becoming the first Russian bank to establish a branch in Iranian territory.

It was also announced in May that Russian citizens holding bank cards connected to their national payment system, known as Mir, were able to use the cards for making payments inside Iran. Iranian citizens can also use cards connected to Iran’s Shetab integrated payment system to withdraw rubles from automated teller machines in Russia. - Press TV