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RBI bars issuance of letters of undertaking for trade credit

Reuters  |  MUMBAI 

(Reuters) - The of India (RBI) ordered commercial banks on Tuesday to stop issuing with immediate effect guarantees in the form of letters of undertaking - which are at the heart of the country's biggest fraud - in the latest regulatory clampdown.

The RBI also barred the issuance of letters of comfort, but said letters of credit and guarantees can be continued to be issued if certain rules are met. (

The instruments are all forms of trade often used by importers to fund their overseas purchases.

(Reporting by Devidutta Tripathy, and Suvashree Choudhury; Editing by Subhranshu Sahu)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, March 13 2018. 19:06 IST