Embassies threaten retaliatory measure for Indian diplomats after cash ban

NEW DELHI: Embassies of some European and Asian countries have threatened to recommend cash withdrawal limits for Indian diplomats posted in their countries as a reciprocal measure since India continues with cash withdrawal limits for diplomatic missions here since November 9.
Certain countries, including strategic partner Russia, had sent protest letters to the Ministry of External Affairs, seeking an early solution to the Reserve Bank of India directive limiting bank withdrawal for foreign diplomats. They said that this had hampered functioning of embassy work and local payments.

It is not just regular embassy work that is hit by the cash crunch. Embassies are facing trouble even while making arrangements for state visits. For example, Indonesia is not finding it easy to arrange for the big visit of President Joko Widodo, aka Jokowi, next week.

“The visit has been in works for the past one year and finally taking shape amid hope to give a push to ties between Southeast Asia’s biggest country and India. Modi could not attend 60 years celebration of Bandung conference organised by Jokowi in 2015 and both are looking forward to give new momentum to the partnership.

But the limit on bank withdrawal by RBI for the embassy has hampered the process of arrangements for the visit,” an expert on the subject told ET. Resource-rich Kazakhstan faced similar inconvenience while arranging Independence Day celebrations last Friday, diplomats told ET.

The embassy had invited renowned orchestra artists from Kazakhstan to celebrate its 25th Independence Day and the diplomatic mission had a tough time arranging payments involving the troupe. “Embassies work on long-term credit based on longterm association. From severe crisis, as faced by the Russian mission, to medium pains, diplomats in India are facing inconvenience due to cash crunch,” a senior diplomat said.

The crisis is not limited to developing countries. Embassies from the Gulf too are facing hardships as several of their nationals are here on medical visas, sources said.

Missions from western nations used to debit and credit cards also have problems paying certain utility bills as well as local staff, which have created a headache in the past few weeks. Diplomats indicated that while Western embassies are yet to register formal protests with MEA, their diplomats are not satisfied with the prevailing situation that has impacted work and arrangements of social events.

These missions have decided to adopt a ‘wait and watch’ policy with a hope that India will provide a quick solution to address the issue of cash crunch.