Barter trade: Pakistan, India to route payments through banks

Move aimed at curbing terror financing.


Ppi February 16, 2011

NEW DEHLI: In a bid to stop profits from being used for terror funding or illegal Hawala system, India and Pakistan may monetise barter trade across the Line of Control (LoC), according to newspaper Indian Express.

Earlier this month, New Delhi sent a proposal to Islamabad, identifying J&K Bank as the financial intermediary from the Indian side to handle remittances through a Nostro account, in order to track money payers and recipients of goods.

Since monetising LoC trade would involve both Indian rupees and Pakistani rupees, Islamabad has to mandate its bank with a branch in Kashmir to maintain a similar account.

J&K Bank will open a Pakistani rupee-denominated account in a Pakistani bank and instruct traders to settle transactions with it. In return, the Pakistani bank would open an Indian-rupee account with J&K Bank for similar transactions.

LoC trade was initiated as a confidence-building measure in October 2008, with both governments identifying 21 home-grown items from the two Kashmirs for barter trade. However, this antiquated system has no provision for information about buyers who are to be approached for payments.

Trade has surged over the years and been riddled with accusations of hawala, due to discrepancies in data. Moreover, the entry of bulk traders from Lahore and Delhi has attracted the attention of intelligence agencies, the report said.

Published in The Express Tribune, February 16th, 2011.

COMMENTS (3)

SARA | 13 years ago | Reply Trade is good but getting dependent on those items isn't..we better improve our quality and find other subsititude.
Paras Vikmani | 13 years ago | Reply so wht if disputes dnt end trade must be encouraged
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