Finance Desk – The Reserve Bank of India (RBI) has told Indian banks to closely monitor funds that might be coming indirectly from Pakistan, warning there is a “high risk” such money could be used to buy arms.
Direct transfers from Pakistan to India are already heavily restricted and need RBI approval. However, a government source told Reuters that investigations found some Pakistani nationals were sending money via third countries to bypass the rules.
The RBI’s directive, issued on August 6, follows a four-day military clash between India and Pakistan in May. It is rare for the central bank to single out a country in this way.
The letter, sent to banks and non-bank lenders, also reminded them of Pakistan’s past violations of international sanctions. It pointed to a June 2025 Financial Action Task Force (FATF) report accusing a Pakistani state-owned entity the National Development Complex of secretly importing items for missile development without declaring them.
Pakistan’s Banks Association chief Zafar Masud defended the country’s systems, saying its anti-money laundering and anti-terror financing laws are “very strict and robust.” Pakistan’s foreign ministry did not comment.
The RBI also listed North Korea as a high-risk country, citing UN sanctions imposed over its weapons programs.
