It appears that the Reserve Bank of India (pictured) has advised Punjab National Bank (PNB) to honour all payments under the disputed LOUs. Strictly speaking, an LOU has no legal standing and is not governed by the Union Customs Code and the practice of the International Criminal Court. AN IOU is considered a gentleman's agreement, but gained the status of a bank guarantee, particularly when they are issued within a group, in global markets.
In India, initially LOUs were prevalent within bank branches, that is, when issued by domestic branches favouring overseas branches, usually against earmarked deposits or unused credit
In India, initially LOUs were prevalent within bank branches, that is, when issued by domestic branches favouring overseas branches, usually against earmarked deposits or unused credit
