A senior Congress leader, who handled crucial ministries during the United Progressive Alliance (UPA) government’s first tenure between 2004 and 2009, pushed for the opening of a branch of Pakistan’s largest bank, Habib Bank Limited (HBL), in India, despite massive security concerns. The security agencies, however, managed to make the then government see better sense after a lot of opposition, thus ensuring that the bank was not given permission to function from India.

The Sunday Guardian recently filed an RTI with the Ministry of Finance and the Reserve Bank of India (RBI) seeking file notings, minutes of the meetings and other relevant documents related to the plan to grant banking licence to HBL. However, in its reply, the RBI said that since the “information sought pertains to security, strategic, economic interest of the state and relation with foreign state, the information cannot be disclosed”.

Officials familiar with the deliberations that took place in the government regarding HBL, said that in 2006, the Pakistani bank sought from the RBI the licence to start banking operations in India. “We came to know at a later stage that HBL applied for the licence only after it was assured through indirect contacts, that a certain influential minister would help it get the licence. However, the security agencies immediately red flagged the application, as HBL is a well known front for laundering terror money and has a history of facilitating money movements for terror groups. But in spite of our opposition, the minister kept pushing HBL’s case. Finally, faced with stiff resistance from us, he backed off,” said an official aware of the developments.

Habib Bank Ltd was sued by Mariane Pearl, the wife of US journalist Daniel Pearl—who was beheaded by Pakistan based terrorists—for “aiding, abetting and providing material support in the form of financial services for the terrorist support organisations”. According to Mariane Pearl, “Habib Bank knowingly conducted financial transactions” on behalf of two banned Islamic charities, Al Rashid Trust and Al Akhtar Trust International. Later, she dropped the lawsuit for reasons unspecified.

Similarly, India’s former National Security Advisor, M.K. Narayanan, in November 2007, said that the HBL was manipulating stock markets to raise funds for terrorism and stated that the bank was involved in moving funds for terrorist purposes.

HBL once again came on the radar of the security agencies after intelligence collected in 2004 suggested that the ISI was providing support to India’s Maoists by using the “friendly” business relations between Pakistan’s Habib Bank and Nepal’s Himalayan Bank. Habib Bank is identified as a funding agency of Pakistan’s intelligence agency ISI.

“We had documented proof that HBL was engaging in anti-India activities by helping terrorists and Maoists from a time much before the bank applied for the licence. In spite of knowing all this, the minister tried hard to help HBL function from India,” the official said.

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