Pakistan rejects Indian bank's claims

Pakistan's central bank has rejected claims that Pakistan-related fund flows were 'high risk,' saying such assertions were politically motivated.

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 neighbouring countries engaged in a fierce four-day military conflict in May.

Pakistan's central bank rejected claims that Pakistan-related fund flows were 'high risk,' saying such assertions were politically motivated.

A spokesperson for State Bank of Pakistan (SBP) told Reuters such steps did not reflect objective assessments made by global standard-setting bodies.

The central bank would work with global financial bodies to keep Pakistan's trade and remittance flows smooth, transparent and regulated, said the spokesperson.

Zafar Masud, president of the Pakistan Banks Association, said in a statement Pakistan's 'anti-money laundering laws and combating the financing of terrorism is very strict and robust.