While the quantum of money involved in terror financing incidents in the country is "very, very minuscule", the damage done by such activities is significant, a top security official said today.

Advisor (Technical) in the Home Ministry, Ashok Prasad claimed it was "much easier" for the security agencies to catch a terrorist than track illegal his money as the routing of funds is done through various methods like hawala and also transported by some people returning from Haj pilgrimage.

He said detection of terrorist financing was akin to "catching rain drops" or like finding "a needle in a haystack".

Prasad was addressing officers of the Enforcement Directorate (ED) while delivering key note address on the subject 'Terrorist Financing' during the annual ED day event held here.

"The quantum of money in terrorist financing is very, very minuscule, hence it is so difficult to detect. However, despite the small scale of such funds... It (damage to economy) is very significant...it is most visible threat to national and international security," the former Jammu and Kashmir DGP said.

The retired IPS officer said the funding of terror activities and routing of funds is done through various methods like depositing money in individual accounts which can be later withdrawn by a person in another city using an ATM card or through jewellery sale and purchase.

He said such money is also transported out and brought back to the country by some people who go abroad for performing Haj, and also by misusing diplomatic channels where such funds are sent to people in embassies of countries inimical to India.

The "main channel" for terror financing is the hawala route, he said. Hawala pertains to using the legal banking channels to send illegal funds escaping the notice of regulatory and probe agencies, and also where people are used as couriers to transfer huge amounts of funds.

He asked investigative agencies like the ED and others to work in concert with the intelligence agencies as getting a good snoop information was is the most important part in cracking down on terror financing.

The need of the hour is to improve intelligence gathering, develop intelligence assets and analytical tools, he said, adding intelligence sharing in such instances was "rudimentary".

Prasad claimed terror financing was difficult to catch as, in a number of cases, the funds come from certain state agencies with the support of the country concerned.

Prasad said while there was "no official quantification" of money involved in terror financing in the country, he had information that a large terror group active here used to get Rs one crore a month. He, however, did not disclose the identity of the terror outfit.