RBI permits banks to issue guarantees for NRI investments

Posted By: Religare
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RBI permits banks to issue guarantees for NRI investments
In yet another step to attract foreign money to the country, the Reserve Bank of India (RBI) has permitted banks to issue guarantees on behalf of non-resident Indians when acquiring shares in an Indian company, said media report.

"In order to provide operational flexibility and ease the procedures, it has been decided to permit banks to issue bank guarantee, without prior approval of the Reserve Bank, on behalf of a non-resident acquiring shares or convertible debentures of an Indian company through open offers/ delisting/exit offers," the RBI said in a notification.

Besides, the guarantee provided by a bank should be covered by a counter-guarantee of a bank of international repute and should also be valid during the tenure of the offer period, it said.

In case of invocation of the guarantee, the bank is required to submit a report on the circumstances leading to the invocation of the guarantee to the RBI's Foreign Exchange Department.

Dion Global Solutions Ltd.

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