Under pressure from diplomatic missions facing a cash crunch due to demonetisation, the government will ask the banks to allow diplomats to withdraw money on a priority basis.
Foreign Secretary S Jaishankar today met the Dean of Diplomatic Corp Frank Hans Dannenberg Castellanos and informed him of the instructions which are being issued to banks.
During the meeting with Castellanos, Jaishankar also assured him that the Ministry of External Affairs will look into the basic demand of increased limit for cash withdrawal by the embassies and take it up with the Finance Ministry, MEA Spokesperson Vikas Swarup said.
"Let's see which all concerns are readily addressable," he said.
"The Ministry of External Affairs has received communications from some embassies about the problems they face in the context of the demonetisation of high value notes," Swarup said in his weekly media briefing here.
"With a view to avoid inconveniencing their operations, the ministry has been in discussion with concerned authorities in the government on this matter," he stated.
"The Finance Ministry, as a consequence, is being asked to issue directives to banks to allow embassy officials with identity cards to withdraw money on a priority basis."
On Wednesday, Castellanos, the Ambassador of the Dominican Republic who as Dean represents the voice of 157 foreign missions, said that Rs 50,000 cap a week for the operation of an embassy was not enough.
He had termed the measure a "serious breach" of the Vienna Convention and said that diplomats could not be stopped from accessing their funds and a solution to this was needed soon.
He said that many nations were contemplating reciprocal measures against Indian missions abroad.
Maintaining that the "buck stops" at Prime Minister Narendra Modi's door, he had sought his intervention to resolve the issue soon.
The Russian embassy here as well as several other missions had voiced their serious concern to the government over the restrictions on cash withdrawal and threatened to take retaliatory action against Indian diplomats posted in their countries. Russian Ambassador Alexander Kadakin had gone public with protest.
Noting that the ministry has received communications from some embassies about the problems they face in the context of the demonetisation of old high-value notes, Swarup said, "The Foreign Secretary has met the Dean of the Diplomatic Corps today. They had a very detailed discussion on the issues raised by foreign missions and how best to address them... We gave them a very sympathetic hearing."
With a view to avoiding inconveniencing them, the MEA has been in discussion with the authorities concerned in the government on this matter and "the Finance Ministry, as a consequence, is being asked to issue directives to banks to allow embassy officials with identity cards to withdraw money on a priority basis".
During the meeting, the Dean also asked for raising the limit of weekly cash withdrawal from the existing Rs 50,000 for embassies, Swarup said, adding, "we have agreed to look into that request and take it up with the Finance Ministry and see what can be done."
When contacted, Castellanos, Ambassador of the Dominican Republic, expressed satisfaction over the meeting.
"Although we are waiting for a formal response to the issues brought up by the diplomatic community, I personally feel very positive and I am very pleased by the time and effort taken by the MEA to listen in detail to all the concerns of my colleagues," he said.
Castellanos hoped solution would be jointly found not only to the problems being encountered in the day-to-day operations of the diplomatic missions but also the difficulties foreign nationals visiting India as tourists or for medical treatment were facing.
"The diplomatic community is sensitive to the temporary difficulties that affect the whole population of India and hope that the measures bring the expected positive results in the future for (India becoming) a more transparent destination for foreign investments from our countries and a healthier overall economy," he said.
Swarup also said, "We appreciate learning from the Dean that the vast majority of foreign missions understand that the demonetisation exercise is being conducted to combat the menace of black money and tax avoidance.
"We are confident that the missions would bear with the temporary difficulties that arise in that process, even as we seek to address their concerns."
Apart from Russia, other countries which raised the problems being encountered by them due to demonetisation included Ukraine, Kazakhstan and Sri Lanka.
The MEA is part of the inter-ministerial task force, set up by the Department of Economic Affairs, to address various issues pertaining to demonetisation including its impact.
Nepal and Bhutan, two major recipients of developmental aid from India, had also taken up with New Delhi the issue of demonetisation of high-value currency bills and the impact it could have on financial assistance to them.
Swarup also expressed hopes the finance departments of India and Nepal will be able to resolve the issues arising out of demonetisation.
Later, talking on the sidelines of an event, Dalton Sembiring, deputy chief in Indonesian embassy here, said, "Just like other embassies we are also affected. We are facing problems in payments and purchasing materials required by the embassy on daily basis, but we are managing it."
He also said Indian government should have planned before enforcing the decision. "Only a few activities are being done through cash, for the rest we are relying on e-payments," he added.
While embassies can withdraw as much as Rs 50,000 per week, a diplomat can only take out Rs 24,000 per week.
He also said his country can learn "a very important lesson" from the experience of demonetisation in India.
"Indonesia is very interested to study from the drive in India that is aimed at curbing black money and also the role of e-money," the envoy said.
Indonesian President Joko Widodo is arriving in India next week and the mission is also finding it very difficult to make arrangements for the visit.