Diplomatic war between India and Pakistan due to shortage of dollars

A diplomatic war has sparked off between India and Pakistan as the demonetisation has hit bilateral relations between the two countries.

Diplomatic war between India and Pakistan due to shortage of dollars

A diplomatic war has sparked off between India and Pakistan as the demonetisation has hit diplomacy between the two countries.

Pakistani diplomats in New Delhi have refused to take their payable-in-dollar salaries from the Indian bank as the bank has imposed additional conditions for the withdrawal of the salaries. The Pakistani mission has written to Ministry of External Affairs (MEA) to protest against the policies of the bank.



According to Pakistan These conditions, which came into effect only last week, make it mandatory for Pakistan officials to fill up additional forms specifying their expenditures and also that they exchange their dollars with the same bank. Several senior diplomats have refused to withdraw as the exchange rate is much lower than that offered by the bank.

Islamabad has lodged a strong protest with New Delhi and has threatened that disbursal of salaries of Indian High Commission staff in the Pakistani capital may also get affected.


The tussle has come in the wake of Heart of Asia conference in Amritsar, which will be attended by Sartaj Aziz, foreign affairs adviser to Pakistan Prime Minister Nawaz Sharif.

Diplomats can draw their tax-free salaries in dollars. In India, withdrawals by diplomats beyond $5,000 require documentation on purpose of withdrawal. Under that limit, there’s no paperwork.


But demonetisation has led to a sharp spike in demand for dollars, making it a relatively scarce commodity in the financial system. RBL Bank, an Indian private bank that holds the salary account of the Pakistan High Commission staff, has asked diplomats for ‘letters of purpose for withdrawal of any dollar amount.

Pakistan alleged that the bank in question had chosen to target its mission specifically and not imposed similar conditions on other missions. Pakistan said that the conditions imposed by the banks are unfair as it has even fully supported the government's demonetisation move.