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Indian importers face funding crunch with clampdown on credit guarantees

Reuters  |  MUMBAI 

By Suvashree Choudhury and Devidutta TripathyMUMBAI (Reuters) - The Indian central bank's move to cut off a key form of trade finance in the aftermath of a multi-billion dollar fraud could both dent the rupee and sharply raise costs for many importers, bankers and traders said. The Reserve Bank of India announced late on Tuesday it was banning banks from issuing letters of undertaking, or LoUs, a form of credit guarantee often used between Indian banks and their offshore branches.The central bank's latest regulatory clampdown came weeks after Punjab National Bank uncovered a more than $2 ...

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First Published: Wed, March 14 2018. 21:37 IST