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of <h1>India resident giving cross-border guarantees: allowed only if underlying FEMA transaction and lending/borrowing eligibility are permitted</h1> A person resident in India is permitted to act as a surety or principal debtor for a guarantee, provided the underlying transaction for which the guarantee is given or arranged is not prohibited under FEMA or any rules, regulations, or directions issued thereunder. It further requires that the surety and principal debtor be eligible, respectively, to lend to and borrow from each other under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 (as amended), thereby restricting guarantees where the related lending/borrowing relationship is not permissible. This lending/borrowing eligibility condition does not apply to guarantees by an authorised dealer bank backed by a counter-guarantee or 100% deposit collateral from a non-resident, to guarantees by Indian agents of foreign shipping/airline companies for liabilities to statutory or Government authorities in India, or where both surety and principal debtor are residents in India.
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