KARACHI - Pakistan is losing its rice export market in Iran due to non-availability of banking channels between the two countries. In international trade, the commercial letter of credit (LC) is used as a source of payment for a transaction but trade between Pakistan and Iran is being done simply on the basis of cash transaction since currently no facility exists for making payment to Pakistani exporters by Iranian importers under the mechanism of LC. India has grabbed the rice export market of Iran over the last few years. Iran, which was a traditional major buyer of Pakistani basmati rice, is now relying heavily on imports of rice from India, Vietnam and Uruguay to fulfil its demand, said a Karachi-based exporter. Pakistan has no correspondent bank in Iran despite the interesting fact that a complete Commercial Consular office exists in Tehran. The office has done nothing to bridge banking gap between the two countries for the last 3-4 years, he added. Meanwhile, Rice Exporters Association of Pakistan (REAP) has demanded of the Ministry of Finance, Commerce and the State Bank of Pakistan to mull over this issue by opening branches of some Pakistani banks in Iran with an aim to facilitate rice exporters in time to come. Rice exports may decline by the end of this fiscal year due to slowdown in production. The devastating floods in the country have caused severe damage to the agriculture and cropping sector, said another exporter. The value of rice exports for the FY11 is likely to decline to $2.3 billion, he said. It must be mentioned here that the production of rice is estimated to remain 3.5 million metric tons during FY11 compared with last years production level of 6.7 million metric tons.