Multiple choice

Which of the following statement is/are false?

(a) Banks (AD-1) are authorised to issue BGs on behalf of Indian agents of foreign airline companies. (b) Banks cannot issue unconditional guarantees in favour of overseas employers/importers on behalf of Indian exporters. (c) It will be important for the banks to carry out due diligence and verify the track record of such exporters to assess their ability to execute export orders. (d) Banks can issue bank guarantee/Letter of Undertaking (LoU)/ Letter of Comfort (LoC) in favour of the overseas supplier, bank and financial institution up to USD 30 Mn. per import transaction .

  1. (a), (b) and (c)

  2. (b) and (c)

  3. (b) and (d)

  4. All the given statements are false.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Correct Answer: b and d As per Banking regulations act, banks can issue BGs/Letter of Undertaking (LoU)/ Letter of Comfort (LoC) in favour of the overseas supplier, bank and financial institution up to USD 20 mn. per import transaction. Banks can issue unconditional guarantees in favour of overseas employers/importers on behalf of indian exporters.

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