BANK GUARANTEES CAN GO BEYOND 10 YEARS

The Reserve Bank of India has allowed banks to issue guarantees beyond 10 years to keep pace with long- term loans extended by banks. In view of the changed scenario of the banking industry where banks extend long-term loans for the periods longer than 10 years for various projects, it has been decided to allow banks to also issue guarantees for periods beyond 10 years,.However, while issuing such guarantees, the banks should take into account the impact of very long duration guarantees on their asset liability management.