The finance ministry has asked public sector banks (PSBs) to be on high vigil against any attempt being made to seize their overseas deposits to recover USD 1.2 billion that the UK’s Cairn Energy plc has been awarded against India levying retrospective taxes, sources said.
Cairn had previously stated that it can seize Indian assets abroad if it is not paid USD 1.2 billion plus interest and cost that an international arbitration panel had awarded against levy of retrospective taxes.
Cash of Indian banks lying in nations such as the US and the UK are said to be easy target for seizing and enforcing the arbitration award.
To guard against such cash being taken over, the finance ministry has asked PSBs to be extra vigilant and immediately report back any attempt Cairn makes to legally attach the deposits, two sources aware of the matter said.
This will allow the Indian government to quickly take legal recourse to prevent the assets from being taken over, they said adding that this has been done out of abundant caution and funds with banks are not of Govt of India but of public.A nodal officer has been appointed to deal with this subject in the finance ministry for escalating the matter to the competent authorities for the further action, the sources added. The sources also said banks are keeping enough funds in their nastro account so that they can carry on activity of trade finance and other overseas businesses.