Saturday, September 15, 2012

RBI ISSUES CIRCULAR ON NON - RESIDENT GUARANTEE FACILITIES ENTERED BETWEEN TWO RESIDENT ENTITIES

The Reserve Bank of India (RBI) has decided to extend the facility of non-resident guarantee under
the general permission for non-fund based facilities [such as Letters of Credit/Guarantees/
Letter of Undertaking (LoU) / Letter of Comfort (LoC)] entered into between two persons resident
in India. The method of discharge of liability by the non-resident guarantor under the guarantee
and the subsequent repayment of the liability by the principal debtor would continue, as hitherto.

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