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RBI allows banks to issue guarantees for NRI investments

Besides, the guarantee provided by a bank should be covered by a counter-guarantee of a bank of international repute, RBI says

September 06, 2013 1:15 IST | India Infoline News Service
The Reserve Bank of India (RBI) has relaxed foreign direct investment (FDI) rules and allowed banks to provide guarantees on behalf of NRIs (non-resident Indians) to acquire shares and debentures in Indian companies.

"In order to provide operational flexibility and ease the procedures, it has been decided to permit banks to issue bank guarantee, without prior approval of the Reserve Bank, on behalf of a non-resident acquiring shares or convertible debentures of an Indian company through open offers/ delisting/exit offers," the RBI said in a notification on Thursday.

Such transactions should be compliant with provisions of the Securities and Exchange Board of India, it said.

Besides, the guarantee provided by a bank should be covered by a counter-guarantee of a bank of international repute and should also be valid during the tenure of the offer period, it said.

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