Regulation 3A - Restriction on Obtaining Overseas Guarantee

Restriction on overseas guarantees: domestic rupee structured obligations need prior central bank approval, limited exemption applies.

Companies registered under company law are prohibited from using guarantees from international banks, international financial institutions or joint venture partners as credit enhancement for domestic rupee denominated structured obligations without prior central bank approval. An exception permits residents eligible to raise foreign currency borrowings under the borrowing rules to secure domestic capital market debt such as bonds and debentures with guarantees from persons outside India without prior approval, subject to the central bank's terms and conditions.