Guarantees
The Reserve Bank of India (RBI) has outlined guidelines for Urban Co-operative Banks (UCBs) regarding the issuance of guarantees.
Broad Guidelines: Guarantees can be issued for specific purposes, with a defined maturity period and volume. They can be secured or unsecured, and may be deferred.
Safeguards: UCBs must ensure that guarantees are issued with proper safeguards, including obtaining certified copies of judgments and corresponding with government departments in a timely manner.
Co-acceptance of Bills
UCBs must exercise caution while co-accepting bills to avoid irregularities.
Safeguards: UCBs should implement safeguards to prevent fraudulent activities.
Letters of Credit (LCs)
The RBI has provided guidelines for UCBs to grant LC facilities.
Guidelines: LCs can be opened for specific commodities, with proper safeguards in place.
Payment: Payments under LCs must be settled immediately.
Chat with the Master Circular:
Download: Master Circular- Guarantees, Co-Acceptances & Letters of Credit – UCBs