Discontinuance of Letters of Undertaking (LoUs) and Letters of Comfort (LoCs) for Trade Credits

RBI has issued the following directions vide circular dated 13 March, 2018 under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 –

  • Discontinuance of the practice of issuance of LoUs/ LoCs for Trade Credits for imports into India by Authorised Dealers Category –I banks with immediate effect.
  • Letters of Credit and Bank Guarantees for Trade Credits for imports into India may continue to be issued subject to compliance with the provisions contained in Department of Banking Regulation Master Circular dated July 1, 2015 on “Guarantees and Co-acceptances”, as amended from time to time.

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