After having taken punitive actions by launching strikes against Pakistan-based terror infrastructure as well as its military installations in the wake of Pahalgam terror attack, India is set to tighten screws on Islamabad's economy as it is set to approach the World Bank as well as the terror financing watchdog, the Financial Action Task Force (FATF). New Delhi's prospective move is targeted at asking the World Bank to reconsider its expected approval of a USD 20 billion package to Pakistan in June.
India is also likely to push the FATF to add Pakistan to its grey list, according to reports. It will potentially increase scrutiny on Pakistan's financial transactions, ultimately restricting Islamabad's capital inflows as well as investments.
Moreover, India has also reiterated its concerns regarding International Monetary Fund (IMF) offering over ₹8,000 crore bailout package to Pakistan. New Delhi has reminded that following every IMF loan, the arms purchase by Islamabad sees a hike.
A government source said that India will make a strong case with FATF to revert Pakistan to its "grey list" for failure to comply with anti-money laundering and terror financing rules.
"We will be taking it up (with the FATF)," the source said when asked whether India will make a case with the Financial Action Task Force (FATF) to place Pakistan on the grey list.
Tensions between India and Pakistan have heightened following the terror attack in Pahalgam on April 22, which killed 26 civilians.
India feels that Pakistan has failed to act on terror emanating from its territory and has been diverting funds from multilateral agencies to buy arms and ammunition.
Countries which fail to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing, and are under increased monitoring, are placed in the grey list of FATF.
When FATF places a jurisdiction under increased monitoring, it means the country has committed to resolving swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring.
In 2018, Pakistan was placed on the FATF's grey list and was given an action plan for the country to curb money laundering and terror financing. Following that, in 2022, FATF removed Pakistan from the list.
India had earlier this month opposed the release of the tranche of the IMF's bailout package to Pakistan.
(With inputs from PTI)