Coll 30/224 'Currency Arrangements in the Arab Sheikhdoms of the Persian Gulf' [‎38v] (84/157)

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tikistan Oar^enc^
r w i TbM Political Resident A senior ranking political representative (equivalent to a Consul General) from the diplomatic corps of the Government of India or one of its subordinate provincial governments, in charge of a Political Residency. haa shown rro foreign jiiice
US/91 dated 19th May a-ddresaed to him concerning
compleint of diecriminatory treatment in the Gulf
as I'-Srd i-aMiatan currency. For ease of reiereace 1 quote
ii^otsi this letter:
w Waight has been asked to look into the m* tter and
he will presumably he letting the i’reaaury have hxs
recoai :endations t Xou flight perhaps care to emphasise to
him the importance of avoiding any appearance oi
discrimination against Pakistan; and that ii the Pakistan
rupee continues to suffer a discount in the Gulf it aueu
be clear beyond doubt that this ia a matter of technical
necessity resultiiig from the greater trade of tae Gulf
with India than with Pakistan* If there is any *ay oi
eliminating the discount we shall be glad.
(b) I spent much time In examination of this question
and talked with many people concerning it. The position is,
the merchants pay in Pakistan and Indian notes to the Banks
in the oriinary course of business, bo far as the Banks are
concerned it doesn't master in the least which notes are paid
in provided the Banks themselves obtain equal advantage in
clearing them. Indian notes are repatriated to India for tne
credit of the banks' rupee accounts in India. To the extent •
that such rupees Indian silver coin also widely used in the Persian Gulf. are not required in India; Telegraphic
Transfers on London are requested and obtained freely. To all •
intents and purposes of the Banks, Indian rupees Indian silver coin also widely used in the Persian Gulf. in the Gulf
are the same as Indian rupees Indian silver coin also widely used in the Persian Gulf. in India. *vith Pakistan notes,
however, the position is not on a par with Indian rupees Indian silver coin also widely used in the Persian Gulf. .
Pakistan notes repatriated to Pakistan are credited to Pakistan
rupee accounts of tine Bank concerned and since the Gulf's
requirements of Pakistan currency in payment of Pakistan exports
to the Gulf are relatively small compared with those of India,
the balances built up in Pakistan by repatriation from the Gulf
are of little use. The D&nfcs have requested transfers of
Pakistan rupees Indian silver coin also widely used in the Persian Gulf. to oomoay but have been refused. Furthermore,
the Pakistan St te Bank does not give sterling in exchange for
Pakistan notes repatriated from the Gulf. If the banks were
in a position to use their Pakistan rupees Indian silver coin also widely used in the Persian Gulf. either in payment
of iakistan exports to the Gulf or were allowed to remit from
Pakistan to India, the Gulf x>anka could then treat Pakistan
notes in the Gulf on a parity with Indian rupees Indian silver coin also widely used in the Persian Gulf. , and the cost
i of transfer of these notes to Pakistan just ae the cost of traus
! fer of Indian rupees Indian silver coin also widely used in the Persian Gulf. to India would be absorbed by the uanks
• themaelres. as it is, having very little outlet for Pakistan
rupees Indian silver coin also widely used in the Persian Gulf. , the Banks feel justified In charging a repatriation
charge (amounting to 10 Annas per 100 rupees Indian silver coin also widely used in the Persian Gulf. ) and it is this
charge that forms the so called discount of the Pakistan rupee
in the Julf * The anks could of course refuse to accept
Pakistan rupees Indian silver coin also widely used in the Persian Gulf. altogether since they have very little use for
*eiri. in which event the Pakistan Government would have greater
cause for complaint. They do not refuse to accept, however, but
they feel entitled to reclaim their out of pocket expenses in
returning euch notes to the country of origin.