Bank guarantee on service imports raised to $500,000
06 Oct 2009
The Reserve Bank of India (RBI) has increased the limit for issue of guarantees to service exporters by authorised dealer (AD) Category-I banks from $100,000 to $500,000.
Banks were earlier allowed to issue guarantees in favour of a non-resident service provider, on behalf of a resident customer who is a service importer, for an amount up to $100,000 or its equivalent, subject to the terms and conditions stipulated in the RBI guidelines.
The bank guarantee assures an overseas exporter prompt payment while supplying services to Indian importers.
AD Category-I banks are now permitted to issue guarantees for amounts not exceeding $500,000 or equivalent in favour of non-resident service providers, on behalf of resident customers who are service importers, provided:
The AD Category-I bank is satisfied about the bonafides of the transaction;
The AD Category-I bank ensures submission of documentary evidence for import of services in the normal course; and
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