On Sunday, the Central Bank of Iran’s deputy governor for foreign exchange operations, Alireza Gachpazzadeh, confirmed the development, stating that two Russian banks have agreed to accept the Iranian-issued LCs, according to Press TV.
Gachpazzadeh noted that this new arrangement will boost Iran’s ability to import basic goods, particularly agricultural staples, from Russia. He also indicated that a third Russian bank may begin processing LCs issued by Iranian banks in the near future.A letter of credit (LC) is a document issued by a bank that guarantees a buyer’s payment to a seller. Russia's decision to accept LCs from Iranian banks is significant because it will reduce the costs of imports for Iranian businesses.
This measure is part of expanded economic and trade cooperation between Iran and Russia, as both nations aim to reduce the impact of Western sanctions on their economies. Tehran and Moscow have also been strengthening their banking relations to accommodate the increasing volume of bilateral trade.
In January, Russia’s second-largest bank, VTB, announced it would upgrade its representative office in Tehran to a full branch, making it the first Russian bank to establish a branch in Iran. Furthermore, in May, it was announced that Russian citizens could use Mir cards (Russia’s national payment system) for payments inside Iran. Conversely, Iranian citizens can also use cards connected to Iran’s Shetab integrated payment system to withdraw rubles from ATMs in Russia.
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