NEW DELHI: The Reserve Bank of India (RBI) has asked the country’s lenders to increase scrutiny over funds flowing indirectly from Pakistan, according to a letter seen by Reuters that cited a “high risk” of such money being used to buy arms.
Direct flows of funds from Pakistan to India are largely prohibited with every transaction requiring the central bank’s approval.
The directive, dated August 6, follows investigations by Indian agencies after the two neighboring countries engaged in a fierce four-day military conflict in May.
It named Pakistan as “high risk” jurisdiction from an arms financing perspective and cited Indian investigations into arms financing but did not go into detail about their findings.
According to a government source with direct knowledge of the matter, Indian investigative authorities found that some Pakistan nationals had sent funds to India via other countries. India’s banking channels are at a “high risk” of being used for arms funding by Pakistan, said the source who was not authorized to speak to media and declined to be identified.
