Discontinuance of Letters of Undertaking (LoUs) and Letters of Comfort (LoCs) for Trade Credits by RBI
Discontinuance of Letters of Undertaking (LoUs) and Letters of Comfort (LoCs) for Trade Credits by RBI LOU & Bank Guarantees under which a bank allows its customer to raise money from another Indian bank’s foreign branch in the form of short-term credit. The loan is used to make payment to the customer’s offshore suppliers in foreign currency. The overseas bank usually lends to the importer based on the LOU issued by the importer’s bank. The central bank's move may hit businesses which are dependent on imports, who are often reliant on LoUs to get bank guarantees. RBI NOTIFICATION www.cajd.co.in