Reviewing the guidelines after PNB fraud of Rs.1200+ crores, RBI vide notification dated 13 March 2018 discontinued issuance of LOU/ LOC for Trade Credits for import with immediate effect.
That means, the importers will note be able to take buyers credit anymore, which was extended by the foreign lender (including foreign branches of Indian Banks) on the strength of LOU issued by a Bank in India. Importers were using buyers credit route for relatively cheaper source of credit.
Read: Bankers’ Protest on 21st March at Jantar Mantar
“On a review of the extant guidelines, it has been decided to discontinue the practice of issuance of LoUs/ LoCs for Trade Credits for imports into India by AD Category –I banks with immediate effect. Letters of Credit and Bank Guarantees for Trade Credits for imports into India may continue to be issued subject to compliance with the provisions contained in Department of Banking Regulation Master Circular No. DBR. No. Dir. BC.11/13.03.00/2015-16 dated July 1, 2015 on “Guarantees and Co-acceptances”, as amended from time to time.” reads the RBI notification
The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999.
Finance minister has approved revision in CGM level post in public sector banks. Earlier, the…
Working Capital is a financial indicator of operational liquidity of a business organization. Working Capital…
Meaning of pari passu charge - Pari-passu is a Latin phrase, which means "equal footing". …
The Simplified Turnover Method is normally used by banks in order to assess the working…
Letter of Credit (LC) and the ‘Standby Letter of Credit' (SBLC) are used by Importers…
Punjab National Bank (PNB) has announced a Diwali surprise event for its employees. To express…