The Intelligence Bureau has alerted the government about a quantum jump in the foreign money flowing in the country through withdrawals by foreigners on credit and debit cards issued by the foreign banks.

It warns that such money poses a serious security risk as it can be pumped into terrorist and other anti-national activities. It started probing withdrawals after intercepting a highly volatile terrorist conversation on transfer of funds through credit cards.

Investigations led to eight states in particular, including Andhra Pradesh, Goa, Gujarat and Maharashtra, witnessing withdrawal of large sums of money by foreigners using the cards with no way to track transactions, sources said.

They said the agency's worry is that there is no system to check if a foreigner is withdrawing daily in small amounts from money deposited in any foreign bank by a terrorist organisation anywhere in the world. The small withdrawals do not create suspicion, but totalling all such money taken out on the daily basis will throw up a mind-boggling figure, the sources said.

They said the IB has not only alerted union home secretary G K Pillai on this new form of funding for suspected anti-national activities, but it has also written to the finance ministry and the Reserve Bank of India (RBI) to quickly put in place a system to monitor withdrawals of money by foreigners on their credit and debit cards.

Presently, there is no system to monitor transactions made by the foreigners using these cards as they are recorded on the computer servers located abroad that can not be tracked unlike the Indians' transactions that can be checked in no time because they are managed by the servers based in India, the sources said.

Since the withdrawals are in the Indian Rupee while the deposits in the foreign banks are in the US $ or other foreign currency, there is also a risk of the heavy foreign exchange outflow, the sources said.

They point out that India is not alone facing this boom in the credit and debit card withdrawals. The United States is battling the problem as seen from a circular put by the commissioner of internal revenue on its website irs.gov about "repatriation of offshore funds using credit cards."

The circular says: "Credit cards (such as MasterCard and VISA) issued by tax haven domiciled banks are a preferred method used by U.S. taxpayers to anonymously and covertly repatriate offshore funds that may or may not have been previously taxed. American Express cards are used in the same way but differ in that these cards are issued directly by American Express rather than by member banks."

The IB has urged the RBI to devise a method to ensure the foreigners' card withdrawals are put under scrutiny and those taking out huge sums through ATMs in India are reported to the authorities to keep check on their activities.

It has also suggested that the ATMs should be calibrated to refuse withdrawals on the foreign banks' cards after an individual reaches a particular limit of money taken out over the period of his or her stay in India.