Direct flows of funds from Pakistan to India are largely prohibited with each transaction requiring the central financial institution’s approval.
The directive, dated August 6, follows investigations by Indian businesses after the 2 neighbouring nations engaged in a fierce four-day army battle in Might.
It named Pakistan as “excessive danger” jurisdiction from an arms financing perspective and cited Indian investigations into arms financing however didn’t go into element about their findings.
In line with a authorities supply with direct information of the matter, Indian investigative authorities discovered that some Pakistan nationals had despatched funds to India through different nations.
India’s banking channels are at a “excessive danger” of getting used for arms funding by Pakistan, mentioned the supply who was not authorised to talk to media and declined to be recognized. The central financial institution has basic tips in place for banks to stop cash laundering, and the financing of arms and terrorism, however a directive drawing consideration to Pakistan is uncommon. The Reserve Financial institution of India didn’t reply to a Reuters’ request for remark. Zafar Masud, president of the Pakistan Banks Affiliation mentioned in a press release that Pakistan’s “anti-money laundering legal guidelines and combating the financing of terrorism may be very strict and sturdy.”
The RBI letter to banks and non-bank lenders additionally individually cited cases the place Pakistan has been accused of violating international sanctions and guidelines.
It famous {that a} June 2025 report by the worldwide anti-money laundering watchdog Monetary Motion Process Drive had accused a Pakistan state-owned entity, the Nationwide Growth Advanced, of evading sanctions by importing objects for missile improvement with out declaring them.
Pakistan’s international ministry didn’t reply to a Reuters request for remark.
The letter additionally listed North Korea as a “excessive danger” jurisdiction, citing sanctions imposed by the United Nations Safety Council on the nation prior to now.