Thursday, February 3, 2011

Issue of Guarantee- Import of services

Authorised Dealer may issue guarantee on behalf of their customers importing services, provided :
a.  the guarantee amount does not exceed USD 500,000

b.  the AD Category –I Bank is satisfied about the bonafides of the transaction.

c.  the AD Category –I Bank ensures submission of documentary evidence for import of services in the normal course.

d.  the guarantee is to secure a direct contractual liability arising out of a contract between a resident and a non-resident.

In the case of a Public Sector Company or a Department /Undertaking of the Government of India /State  Governments, approval from the Ministry of Finance, Government of India for issue of guarantee for an amount exceeding USD 100,000 (US Dollars one hundred thousand only) or its equivalent is required.

In case of invocation of the guarantee, the Authorised Dealer is required to submit to the Chief General Manager-in-Charge, Foreign Exchange Department, Foreign Investments Division (EPD), Reserve Bank of India, Central Office, Mumbai- 400001 a report on the circumstances leading to the invocation of the guarantee.

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