Bank guarantees: issuance, monitoring and prompt honouring required under RBI prudential and compliance safeguards. Consolidates RBI instructions on issuance, monitoring and honouring of bank guarantees and co acceptances: banks should prioritise financial guarantees, limit maturities (normally ten years), adopt Board approved policies for non constituent non fund facilities with full KYC/AML and credit appraisal, impose internal controls (dual signatures, reporting, periodic reviews), avoid large unsecured guarantees and guarantees enabling placement of funds with NBFCs, ensure prompt payment of invoked guarantees unless court restrained, and follow specific safeguards for export guarantees, overseas JV/WOS exposures, co acceptances and letters of credit while complying with FEMA and prudential norms.
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Bank guarantees: issuance, monitoring and prompt honouring required under RBI prudential and compliance safeguards.
Consolidates RBI instructions on issuance, monitoring and honouring of bank guarantees and co acceptances: banks should prioritise financial guarantees, limit maturities (normally ten years), adopt Board approved policies for non constituent non fund facilities with full KYC/AML and credit appraisal, impose internal controls (dual signatures, reporting, periodic reviews), avoid large unsecured guarantees and guarantees enabling placement of funds with NBFCs, ensure prompt payment of invoked guarantees unless court restrained, and follow specific safeguards for export guarantees, overseas JV/WOS exposures, co acceptances and letters of credit while complying with FEMA and prudential norms.
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