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RBI discontinues LOUs/LOCs issuance for trade credit for imports

ANI  |  New Delhi [India] 

The (RBI) on Tuesday announced discontinuation of the issuance of Letters of Undertaking (LOUs) and Letters of Comfort (LOCs) for trade for imports with immediate effect.

The in its notification said,"It has been decided to discontinue the practice of issuance of LoUs/ LoCs for Trade Credits for imports into by AD Category -I banks with immediate effect."

"Letters of and for Trade Credits for imports into may continue to be issued, subject to compliance with the provisions contained in Department of Banking Regulation Master Circular on "Guarantees and Co-acceptances", as amended from time to time," It added.

The RBI added that the aforesaid Master Direction will be updated to reflect the changes.

However, it mentioned that the changes will be applicable from the date of issuance of the circular.

In the aftermath of (PNB) fraud case, a couple of banks had clamped down on the issue of LoUs.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, March 13 2018. 20:00 IST