FEMA Violations
RBI advises banks against FEMA violations on guarantees by non-residents
This story was originally published at 21:58 IST on 4 October 2024
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MUMBAI – The Reserve Bank of India Friday said it has taken note of instances where guarantees issued by persons resident outside India favoured Indian residents, which is not permitted under the Foreign Exchange Management Act, 1999. The central bank has asked Authorised Dealer Category-I banks to ensure the guarantee contracts advised by them to, or on behalf of, their resident customers comply with FEMA regulations, the RBI said in a circular.
"The RBI has come across instances of guarantees (including standby letters of credit and / or performance guarantees) issued by persons resident outside India, favouring persons resident in India, which are not permitted under the extant FEMA regulations," the central bank said. Authorised Dealer Category-I banks are such banks which are authorised by the RBI to buy and sell foreign exchange for specific purposes. End
Reported by Sourabh Kumar
Edited by Manisha Baxla
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