Guarantees
The Reserve Bank of India has outlined guidelines for Urban Co-operative Banks (UCBs) regarding the issuance of guarantees. These guidelines cover the purpose, maturity, volume, and types of guarantees, including secured, unsecured, and deferred payment guarantees.
UCBs must exercise caution when issuing guarantees, especially for commodities covered under selective credit controls. They must also ensure immediate settlement of cases and obtain certified copies of judgments in a timely manner.
Correspondence with government departments must be handled carefully, and UCBs must adhere to safeguards to prevent irregularities.
Co-acceptance of Bills
UCBs must be cautious when co-accepting bills to avoid irregularities. They must follow safeguards to prevent fraudulent activities.
Letters of Credit (LCs)
The RBI has provided guidelines for UCBs to grant LC facilities. These guidelines cover the opening of LCs, especially for commodities under selective credit controls.
UCBs must exercise caution when opening LCs and ensure immediate payment under LCs.
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Download: Master Circular- Guarantees, Co-Acceptances & Letters of Credit – UCBs