Contact Your Financial Adviser Money Making MC
16
March 2018
 |
SBI(The
Total Investment & Insurance Solutions)
The RBI's decision to discontinue the Letters
of Undertaking (LoUs) or Letters of Comfort (LoC) might increase the credit
cost for imports as it will lead to a shift towards "other off-balance
sheet" products, said a State Bank of India (SBI) report on Friday. The Total Investment & Insurance
Solutions
According
to SBI Ecowrap report, the shift to "other off-balance sheet"
products will be "administratively time consuming" and in the
short-term might impact export funding as well. The Total Investment & Insurance Solutions
On
March 13, RBI decided to discontinue the system in the wake of the Rs 12,600
crore fraud at the state-run Punjab National Bank (PNB).
"Banning
LoUs/LoCs might lead to shifting to other off balance sheet products -- LCs,
Bank Guarantees, other fund based facilities or on to balance sheet," the
SBI Ecowrap report said.
"We,
however, believe the shift to other off balance sheet products if occurs, will
be administratively time consuming. However capital charge may vary for
different products leading to changes in capital requirements in either
direction depending on the product used and associated risk."
Earlier,
banks were permitted to issue guarantee/LoU/LoC in favour of overseas supplier,
bank or financial institution up to $20 million per import transaction under
the automatic route for a maximum period up to one year in case of import of
non-capital goods. The Total Investment
& Insurance Solutions
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.The Total Investment & Insurance
Solutions
No comments:
Post a Comment