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By Drazen Jorgic ISLAMABAD (Reuters) - Pakistan plans to take action against militant groups operating on its soil, a minister said on Monday, amid global pressure to act after a suicide bomber killed 40 Indian paramilitary police in Kashmir last month. But Information Minister Fawad Chaudhry denied Indian accusations that Pakistan was involved in the Feb. 14 attack, which led to a sharp rise in hostilities, saying it "had nothing to do with us". Nuclear-armed Pakistan and India both carried out aerial bombing missions last week and on Wednesday fought a brief dogfight in the skies over the disputed Himalayan region of Kashmir, but they stepped back from the brink after Islamabad on Friday handed back a captured Indian pilot as a peace gesture. Britain and the United States welcomed the pilot's return but urged Islamabad to take action against militant groups carrying out attacks on Indian soil. Islamabad denies assisting the groups or using them as proxies in its rivalry with India. Previous vows by the Pakistan government to crack down on anti-India militant groups have largely come to nothing, with militant leaders living freely in Pakistan. Pakistan's powerful military dictates the South Asian nation's security plans and foreign policy, including relations with India. Chaudhry said the decision to act was taken at a meeting of the National Security Committee before the suicide bombing, claimed by Jaish-e-Mohammad (JeM), in Kashmir. "A full-fledged strategy is now in place," Chaudhry told Reuters. "We have different strategies for different groups, but the main aim is that we have to enforce the writ of the state. We have to demilitarize if there are groups (on our soil)." Pakistan's English-language Dawn newspaper said a source briefed journalists that a crackdown against militant groups was imminent. "The action would soon be visible as things progress," Dawn cited the source as saying. It did not identify the source or say whether it was from the military or government. In September 2017, Reuters reported that Pakistan's military had decided to deradicalize armed militant groups and try to get them involved in politics. That strategy was criticized by civil society groups and the previous civilian government after the emergence of a new party linked to Hafiz Saeed, the alleged mastermind of the 2008 Mumbai attacks that killed 166 people. Saeed denied a role in the attack but the new party was later banned. DRYING UP MILITANTS' FUNDS Chaudhry said Pakistan would use an "economic, political and administrative strategy" that would adhere to Pakistan's National Action Plan (NAP) formulated in 2014, which vowed to stamp out militant groups. Analysts say security services carrying out NAP did not target anti-India outfits. Chaudhry added that Pakistan would also fulfill demands set out by a global watchdog, the Financial Action Task Force (FATF), which put Pakistan on a terrorism watch list in 2018 on the urging of the United States and European nations. "We have to implement FATF conditionalities, and likewise, we have taken strict measures on money laundering to dry the source of funding for these groups," Chaudhry said. Chaudhry said the government was looking to close "loopholes" that allowed banned groups to operate. "With banned groups it will be made sure that they will be banned in practical terms also," he said. "The problem is that they change names and start operating from other names. This needs to be taken care of." India accused Pakistan of playing a role in the Feb. 14 JeM attack in the Kashmiri city of Pulwama. "We have looked at the incident and it is our considered opinion that Pulwama has nothing to do with us," Chaudhry said. The United States, Britain and France proposed last week that the U.N. Security Council blacklist the head of JeM, Masood Azhar. A vote is due to be held in mid-March with a focus on Pakistan's staunch ally China, which has blocked previous attempts by world powers to sanction the JeM chief. Pakistan's foreign minister last week told CNN that Azhar was in Pakistan and "really unwell". India on Tuesday bombed what New Delhi called a JeM militant training camp in a forest area in northern Pakistan, killing "many terrorists". Islamabad denied such a camp existed and invited journalists to visit the site. Villagers in the area said there was no active militant camp but pointed to a nearby madrasa and said it was run by JeM. The military prevented Reuters reports from visiting the madrasa. (Additional reporting by Asif Shahzad:; Writing by Drazen Jorgic; Editing by Nick Macfie)