Standby letter of credit for commodity hedging permitted, subject to remittance approval and specified issuance conditions. AD Category I banks may issue standby letters of credit or bank guarantees to cover payment obligations for overseas commodity derivative contracts if remittance is permitted under delegated authority or specific Reserve Bank approval. Such instruments must be for margin payments on approved hedging activities, limited to previous year's margin amounts to the counterparty, for up to one year with a lien on non funded facilities; issuing banks must have Board approved policies, treat exposures as part of customer credit, apply risk weights for capital adequacy, and verify brokers' month end reports.
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Provisions expressly mentioned in the judgment/order text.
Standby letter of credit for commodity hedging permitted, subject to remittance approval and specified issuance conditions.
AD Category I banks may issue standby letters of credit or bank guarantees to cover payment obligations for overseas commodity derivative contracts if remittance is permitted under delegated authority or specific Reserve Bank approval. Such instruments must be for margin payments on approved hedging activities, limited to previous year's margin amounts to the counterparty, for up to one year with a lien on non funded facilities; issuing banks must have Board approved policies, treat exposures as part of customer credit, apply risk weights for capital adequacy, and verify brokers' month end reports.
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