Except PNB, no other public sector bank issued unauthorised LoUs: SBI official

The RBI said the decision to discontinue the practice of LoUs and Letters of Comfort for trade finance comes into force with immediate effect. Reutrs File

In a notification issued to all banks on Tuesday, the Reserve Bank of India said it has chose to discontinue with immediate effect the practice of issuance of LoUs and letters of comforts (LoCs) for trade credits by banks for imports into India. LoUs and LoCs are instruments issued by Indian Banks to domestic importers to get forex from banks overseas, at a cheaper rate.

The RBI directive is effective immediately. LoUs have always been main source of funding for the industry to avail buyers credit. It is alleged that Modi and Choksi used LoUs far beyond the limit to which they were entitled and in the end defaulted on the payments to PNB.

FIEO president said that since most of the exporters are using letter of credit and bank guarantees, which are relatively safe, the move will not have much adverse bearing on exports. However, banks have sought clarification from RBI for alternative sources of finance to importers and repayment facilities to be provided to borrowers. In a LC-based transaction, the goods are consigned to the order of the issuing bank, meaning that the bank will not release control until the buyer has either paid or undertaken to pay the bank for their guarantee.

European Union tells Britain to 'face up to hard facts' on Brexit
The European Parliament's Brexit co-ordinator Guy Verhofstadt also called for more details from Ms May. Other sticking points will be avoiding a hard border in Ireland, as well as securing citizens' rights.

Rajya Sabha polls: TDP files nominations for just two seats
The Congress also extended support to independent candidate PK Valera, who is a Congress general secretary in the state unit. Three out of the seven candidates filed their nomination papers in the last 30 minutes before the 3-PM deadline today.

2 dead, 1 rescued in New York City helicopter crash
The East River separates the borough of Queens on Long Island from the Bronx and also divides Manhattan from Queens and Brooklyn. Two years before that, in July 2007, a Liberty sightseeing chopper carrying eight people dropped into the Hudson River.

In a statement, Confederation of Indian Industry (CII) president Shobana Kamineni said the move would have a "disruptive impact" on the buyers' credit market, in the immediate term. Traders who have been conducting business through these two instruments will now have to necessarily shift their transactions to LC and Bank Guarantees. Collateral securities, personal guarantees and reasonable margins may be taken to secure the position of banks.

As per the latest available RBI data, guarantees given on behalf of constituents outside India stood at Rs 1.95 lakh crore as on March 31, 2017.

For import of capital goods, the period of guarantee/ Letters of Credit/ Letters of Undertaking by AD can be for a maximum period up to three years. Credit extended by all categories of banks declined during 2016-17. Fee income of Indian banks operating overseas from trade finance related services rose from Rs 1370 crore to Rs 2020 crore in 2016-17, according to RBI data.

Related news:

Hot News

Russian Federation will 'of course' expel British diplomats over nerve toxin attack: Lavrov
Mar 17, 2018 - 01:41
Mr Corbyn said Labour did not support Mr Putin and that Russian Federation should be held to account if it was behind the attack. Johnson said the attack on Skripal and his daughter with a military-grade nerve toxin was most likely ordered by Putin himself.

isis-killer-beheading-video-story-top 'Willy Wonka' Star Paris Themmen, Who Played Mike Teevee, Appears on 'Jeopardy!'
Mar 16, 2018 - 07:33
Bucket), Paris (Mike Teevee) and Julie Dawn Cole Poses (Veruca Salt). "Great job Paris!" another wrote . As one of the above Twitter users surmised, maybe Trebek just hasn't seen " Willy Wonka ".

isis-killer-beheading-video-story-top Russian Federation to send space mission to Moon, Mars, - Putin
Mar 16, 2018 - 07:25
NASA hopes the mission will help to answer key questions about the potential for life on Mars . The announcement comes after NASA unveiled its own £1.5billion ($2.1 bn) Mars exploration bid.

isis-killer-beheading-video-story-top Lockdown on Forest Hills High School is lifted
Mar 16, 2018 - 07:23
Klein said about 150 students were pulled out of class after the lockdown. "We deemed the school safe (after the search)". Ted Henderson told reporters that no threat was found after a systematic room-by-room search of the large high school.

isis-killer-beheading-video-story-top Spotify Will Go Public On April 3
Mar 16, 2018 - 06:58
But net financing costs of €855m ($1.05bn, £755m) pushed up operating losses to €378m ($465m, £334m) from €349m ($429m, £308m). Spotify also will not rely on underwriters to help assess market demand and set an initial price for the stock.

isis-killer-beheading-video-story-top Super Bomberman R Officially Announced for June Release on Xbox One
Mar 16, 2018 - 06:53
Super Bomberman R features a battle mode that supports up to eight players (local and online ) in last man standing-style match. The exclusive characters are Ratchet [PS4], MasterChief [Xbox One] and P-body from Portal series [STEAM].

isis-killer-beheading-video-story-top Rand Paul says he'll oppose Trump's CIA, State Department nominees
Mar 16, 2018 - 06:21
Senator Ron Wyden said he opposed her nomination. "I know the Senate will do its job in examining Ms. Sheldon Whitehouse (D-R.I.) said last February. "This is a debate that's really worth having".

isis-killer-beheading-video-story-top North Port police: Woman took knife from would-be kidnapper and killed him
Mar 16, 2018 - 06:12
Holloway's mother, Beth Holloway, sued the network and the production company that was responsible for the 2017 program. Gabriel Madrigal was friends with Ludwick and says that he had a history of suicidal tendencies.

isis-killer-beheading-video-story-top Premier League preview: Liverpool look to get back on track
Mar 16, 2018 - 05:53
I also think the supporters enjoyed it so even if we play Man City, I think we have two good games". The Champions League quarterfinals draw will be broadcast live on BT Sport .

isis-killer-beheading-video-story-top Right-wing hate group Britain First banned from Facebook
Mar 15, 2018 - 02:27
The Mayor of London , Sadiq Khan, said: 'Britain First is a vile and hate-fuelled group whose sole goal is to sow division. The social media platform Wednesday banned the Facebook page of " Britain First ", the far-right fringe group U.S.

isis-killer-beheading-video-story-top Twitch Prime Members To Receive Free Games From Amazon
Mar 15, 2018 - 01:28
Twitch Prime debuted in September 2016, and is actually a part of Amazon Prime , which goes for $13 per month or $99 per year. Your kids will thank you later, even though the games offered won't necessarily be the blockbuster hits in the industry.

isis-killer-beheading-video-story-top ASU, Syracuse want to prove they belong in tournament
Mar 15, 2018 - 01:22
In this photo, the Orange women played their home finale against Boston College on February 25 in a game that Syracuse won, 69-63. Arizona State won its first 12 - beating No. 1 seeds Xavier and Kansas along the way - and went 8-11 the rest of the way.

isis-killer-beheading-video-story-top Trump personal assistant dismissed, joins '20 campaign
Mar 15, 2018 - 01:21
Neither the Journal nor the New York Times could specify what exactly the security issue was that led to McEntee's departure. Aides said McEntee often tried to keep hangers-on away from Trump when he traveled to his Mar-a-Lago estate in Florida.

isis-killer-beheading-video-story-top Mubadala buys 10% stake in Egyptian Shorouk concession from Eni
Mar 15, 2018 - 00:39
The company's average working interest production in 2016 was 320,000 barrels of oil equivalent per day. Rome-based Eni will also take a 5% stake in the Lower Zakum deposit for $300 million, they said.

isis-killer-beheading-video-story-top Melrose increases GKN hostile takeover bid to £8.1bn
Mar 14, 2018 - 05:52
The deal also would see pension liabilities for GKN's remaining aerospace business stand at ten times profit. GKN refuted the 467.00p per share value of the offer, saying it is actually 460.70p.