It has now been
decided that Scheduled Commercial Banks can grant non-fund based facilities like
Letter of Credits (LCs), Bank Guarantees including Partial Credit Enhancement
(PCE) to those customers, who do not avail any fund based facility from any
bank in India, subject to the following conditions:
a) Board
Approved Policy
Banks shall
formulate a comprehensive Board approved loan policy for grant of non-fund
based facility to non constituent borrowers.
b) Verification
of Customer credentials
Banks shall
ensure that the borrower has not availed any fund based facility from any other
bank in India and also obtain a declaration about the non- fund based credit
facilities already enjoyed by them from other banks.
c) Credit
Appraisal and due-diligence
Banks shall
undertake the same level of credit appraisal as fund based facilities.
d) Compliance
with (KYC) Norms / (AML) Standards / (CFT) / PMLA, 2002
The guidelines
on KYC/AML/ CFT, shall be adhered to.
e) Submission of
Credit Information to CICs
Credit
information of such facilities shall be mandatorily furnished to the Credit
Information Companies.
f) Exposure
Norms
Banks shall
adhere to the exposure norms.
Banks are,
however, prohibited from negotiating unrestricted LCs of non-constituents. In
cases where negotiation of bills drawn under LC is restricted to a particular
bank and the beneficiary of the LC is not a constituent of that bank, the bank
shall have the option to negotiate such LCs, subject to the condition that the
proceeds are remitted to the regular banker of the beneficiary.
Based on RBI Circular dt 07/01/16. Please visit www.rbi.org.in for any further clarification if required….. Poppy
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