India has stepped up diplomatic pressure on Pakistan following the April 22 terror attack in Jammu and Kashmir’s Pahalgam, where 26 people were killed. One of the major moves includes a request to the Asian Development Bank (ADB) to stop funding Pakistan.

Sources said that Finance Minister Nirmala Sitharaman raised this concern directly with ADB President Masato Kanda during the bank’s 58th annual meeting in Milan, Italy. She is also reported to have brought up the issue with her Italian counterpart and is in talks with several European leaders.

As of 2024, the ADB’s financial portfolio in Pakistan includes 53 loans and 3 grants, amounting to a total of $9.13 billion. India’s appeal could influence how international institutions continue to support Pakistan financially in the future.

India is also pushing for Pakistan to be added back to the Financial Action Task Force (FATF) grey list, sources added. Countries on the grey list face closer monitoring, which often discourages foreign investment and limits financial access.

The grey list is usually reserved for countries that do not take enough steps to stop money laundering or terrorism financing.

In a statement issued earlier today, Moody’s Ratings said that the worsening situation between India and Pakistan could put pressure on Pakistan’s foreign exchange reserves, possibly affecting its economic growth.

This is the second round of actions taken by India after the Pahalgam attack. Earlier steps included:

  1. Freezing the Indus Waters Treaty
  2. Shutting the Attari border
  3. Cancelling visas of Pakistani nationals

Hinting at further action, Defence Minister Rajnath Singh recently said:

“As the defence minister, it is my responsibility to work with my soldiers and ensure the protection of the country's borders. And it is my responsibility to give a befitting reply, by working with the armed forces… What people desire will certainly happen.”

 

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