With relations between India and Pakistan on a downward spiral, Finance Minister Arun Jaitley is likely to cancel his participation in the SAARC ministerial conference in Islamabad next week.
The meeting is likely to be attended by Economic Affairs Secretary Shaktikanta Das.
"FM Arun Jaitley to not attend SAARC FMs conference in Pakistan, Economic Affairs Secretary Shaktikanta Das to represent India," ANI quoted government sources as saying.
Finance Ministers of SAARC - which has eight South Asian countries as members - are to meet on the 25th and 26th of this month in Pakistan, which said in a recent statement that it would play "a good host".
The ministerial conference comes in the shadow of Rajnath Singh's visit to Islamabad earlier this month where barbs were exchanged between Singh and Pakistan Interior Minister Chaudhry Nisar Ali Khan, who only had a tense and uneasy handshake during the SAARC meeting.
The duo exchanged repartees over issues of terrorism and violence in Kashmir.
"The hostilities were at peak during the Home Ministers' Conference and Dar does not wish a repetition," Pakistani finance ministry officials were quoted as saying by the Express Tribune.
They further said that all regional countries except Bangladesh have confirmed participation of their finance ministers.
"Bangladesh has so far only confirmed the participation of its deputy finance minister. Dar will personally call his Bangladeshi counterpart and urge him to attend the conference," they added.
However, the Ministry of Finance did not comment on whether a bilateral meeting would be held between the finance ministers of India and Pakistan.
The meetings are taking place ahead of the SAARC Summit to be held in November in Islamabad wherein Prime Minister Narendra Modi is also expected to participate.
"All SAARC countries have a lot of potential to develop together utilising each other's potentials and energies. The cooperation is necessary in promoting the welfare and improving the quality of life of the people of the region," said Ishaq Dar.