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Indian state-owned banks not to withdraw overseas funds

May 24, 2021

From Krishnan Nayar NEW DELHI, 23rd May, 2021 (WAM) – The Government of India today strongly denied that it had asked state-owned banks to withdraw funds they hold in foreign currency accounts abroad.

Several state-owned Indian banks have presence in GCC countries. They also have partnership across the Gulf with foreign exchange firms which send remittances from expatriates to their home countries.

'Certain vested parties have orchestrated such misleading reports, which often rely upon unnamed sources and presents a lopsided picture of factual and legal developments,' the Ministry of Finance here said in a statement.

The misleading speculation about withdrawal of funds is 'in anticipation of the potential seizure of such accounts with regard to the Cairn legal dispute,' the Ministry said. The so-called Cairn dispute relates to transfer of shares 15 years ago by Cairn UK, a holding company with subsidiaries in India, which provide oil and gas production, exploration, and development services.

Indian income tax authorities decided that since Cairn UK had made capital gains in the transaction, it ought to pay capital gains tax to the government here to the tune of Indian rupees 102 billion ($1.4 billion).

The company challenged the tax demand at the Permanent Court of Arbitration at The Hague which awarded Cairn damages of about $1.2 billion in December 2020.

'The Government of India has filed an application on 22nd March, 2021 to set aside the December 2020 international arbitral award in The Hague Court of Appeal,' today’s statement said.

Simultaneously, the CEO and representatives of Cairn have been engaged in talks with India to resolve the matter.

'Constructive discussions have been held and the Government remains open for an amicable solution to the dispute,' the Finance Ministry said.