Financial commitment by guarantee: permitted guarantee types and how they count against commitment limits. Regulation 5 permits four categories of guarantees for overseas investment: corporate or performance guarantees by the Indian entity; corporate or performance guarantees by a qualifying group company; personal guarantees by a resident individual promoter; and bank guarantees backed by counter guarantee or collateral from the Indian entity or its qualifying group company. Guarantees by group companies count against the group company's financial commitment limit; personal promoter guarantees count towards the Indian entity's limit. Guarantees must not be open ended; invoked amounts convert to lending. Joint and several guarantees are reckoned fully against each guarantor; performance guarantees are reckoned at one half; roll overs are not fresh commitments if within the original amount.
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Financial commitment by guarantee: permitted guarantee types and how they count against commitment limits.
Regulation 5 permits four categories of guarantees for overseas investment: corporate or performance guarantees by the Indian entity; corporate or performance guarantees by a qualifying group company; personal guarantees by a resident individual promoter; and bank guarantees backed by counter guarantee or collateral from the Indian entity or its qualifying group company. Guarantees by group companies count against the group company's financial commitment limit; personal promoter guarantees count towards the Indian entity's limit. Guarantees must not be open ended; invoked amounts convert to lending. Joint and several guarantees are reckoned fully against each guarantor; performance guarantees are reckoned at one half; roll overs are not fresh commitments if within the original amount.
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