Govt prepares to reclaim $4.52b pre-independence assets from Pakistan

Bangladesh is preparing to formally raise its demand for $4.52 billion in financial claims from Pakistan, comprising its fair share of undivided Pakistan's pre-1971 assets, including aid money, provident funds, and savings instruments.

The issue will be formally raised during the foreign secretary-level talks slated for 17 April in Dhaka, the first such meeting between the two countries in 15 years.

According to foreign ministry officials, one of the most significant claims involves $200 million in foreign aid sent to then-East Pakistan after the devastating 1970 Bhola cyclone.

The amount, deposited with the Dhaka branch of the State Bank of Pakistan, was shifted during the Liberation War to the bank's Lahore branch, officials said.

Similarly, many Bangladeshi government employees who had been stationed in West Pakistan returned home after independence, only to find that the provident fund balances and savings instruments they had accrued were never refunded by Pakistan.

These, too, are part of the broader $4.52 billion claim.

The foreign ministry has compiled detailed evidence from the Bangladesh Bank to substantiate its case, identifying the various components of the outstanding amount.

The issue is also expected to be raised during the foreign minister-level talks between the two countries taking place in Dhaka later this month.

On 27 March, the foreign ministry sent a letter to the Bangladesh Bank governor and the Finance Division secretary, requesting the urgent submission of any remaining documentation relevant to the claim.

A copy of the letter has been obtained by The Business Standard.

Previous demands

The last foreign secretary-level meeting between Bangladesh and Pakistan took place in 2010. Even then, Dhaka reiterated its claim for a fair share of undivided Pakistan's assets. Bangladesh also pressed for a formal apology for the 1971 genocide and the repatriation of stranded Pakistanis.

Foreign ministry officials said Bangladesh has long pressed for the return of the $200 million in cyclone aid that was misappropriated during the Liberation War. In addition, the country has consistently sought its rightful share – around $4.32 billion – of the assets of undivided Pakistan.

According to foreign ministry records, based on population alone, Bangladesh was entitled to 56% of those assets. If contributions to foreign exchange earnings are considered, the share stands at 54%, and by any parity principle, Bangladesh should be entitled to at least 50%.

A post-war assessment prepared by the Planning Commission on 16 December 1971 estimated that West Pakistan had withheld Tk90 lakh in provident fund deposits belonging to East Pakistani civil servants.

Similarly, Tk1.57 crore held in Rupali Bank's Karachi branch during the war was never returned. Pakistan later converted this amount into shares and informed Rupali Bank – but never paid out any dividends.

Bangladesh's attempts to repatriate the funds by selling the shares were also unsuccessful.

Bangladesh honoured obligations

Adding to the grievance, the Bangladesh government honoured the obligations of various pre-independence instruments sold by the Pakistani government – including defence savings certificates and income tax bonds – effectively paying debts that it believes Pakistan should have settled.

A report titled "Statement of Bangladesh Bank Claims Receivable from State Bank of Pakistan and Government of Pakistan" lays out a detailed breakdown.

As of 16 December 1971, the total value of currency in circulation was Rs870.58 crore, at least half of which, Bangladesh argues, is owed to it. Pakistan's banking department alone owes Bangladesh Rs59.63 crore.

Further breakdowns include Rs88 lakh as 50% of paid-up capital, Rs22.62 crore as 50% of statutory funds, Rs6.07 crore as 50% of balances held outside Pakistan, and Rs27.58 crore from other assets.

The Bangladesh government also accepted liability of Tk21.38 crore of some of Pakistan's central government and provincial government debt securities, claims on which Dhaka may lodge.

In addition, Bangladesh has assumed liability for Tk21.38 crore worth of debt securities issued by both central and provincial governments of pre-1971 Pakistan. 

These include Tk14.07 crore in central government loans, Tk2.77 crore in East Pakistan government loans, Tk1.15 crore in West Pakistan government loans, Tk2.46 crore in savings certificates issued against international trading unit investments, and Tk65 lakh in savings certificates linked to Pakistani prize bonds.