Treasury Bills(T-Bills)
29-Jun-2018: Auction of Government of India Treasury Bills
After reviewing the cash position of the Central Government, the Reserve Bank of India, in consultation with Government of India has decided to notify the amounts for the issuance of Treasury Bills for the quarter ending September 2018.
The Reserve Bank of India/Government of India will continue to have the flexibility to modify the notified amount and timing for auction of Treasury Bills depending upon the requirements of the Government of India, evolving market conditions and other relevant factors, after giving due notice to the market. Thus, the calendar is subject to change, if circumstances so warrant including for reasons such as intervening holidays. Such changes, if any, will be communicated through press releases.
Liberalised Remittance Scheme (LRS)
12-Apr-2018: RBI tightens monitoring of outward remittances
The Reserve Bank has tightened reporting norms for the Liberalised Remittance Scheme (LRS) under which an individual can transfer up to USD 2,50,000 abroad in a year.
The LRS transactions are currently permitted by banks based on the declaration made by the remitter. The monitoring of adherence to the limit is confined to obtaining such a declaration without independent verification, in the absence of a reliable source of information.
In order to improve monitoring and also to ensure compliance with the LRS limits, it has been decided to put in place a daily reporting system by AD banks of transactions undertaken by individuals under LRS, which will be accessible to all the other ADs. Now banks will be required to upload daily transaction-wise information undertaken by them under LRS.
Under the LRS, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year for any permissible current or capital account transaction or a combination of both.
Individuals can avail of foreign exchange facility for the purposes within the limit of USD 2,50,000 only. The scheme was introduced on February 4, 2004, with a limit of USD 25,000. The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions.
Letters of undertaking (LoUs)
13-Mar-2018: Discontinuance of Letters of Undertaking (LoUs) and Letters of Comfort (LoCs) for Trade Credits
On a review of the extant guidelines, it has been decided to discontinue the practice of issuance of LoUs/LoCs for Trade Credits for imports into India by AD Category –I banks with immediate effect.
Letters of Credit and Bank Guarantees for Trade Credits for imports into India may continue to be issued subject to compliance with the provisions contained in Department of Banking Regulation Master Circular dated July 1, 2015 on “Guarantees and Co-acceptances”, as amended from time to time.
Letter of Undertaking is a bank guarantee under which a bank allows its customer to raise money from another Indian bank’s foreign branch in the form of short-term credit. The loan is used to make payment to the customer’s offshore suppliers in foreign currency. The overseas bank usually lends to the importer based on the LoU issued by the importer’s bank.
LoUs are important instruments that allow those in the import trade to transact their business. As an importer in India cannot simply buy dollars and send it abroad to make payments to his supplier, various instruments such as LoUs and Letters of Credit are required to carry out the transaction. LoUs, which are essentially a form of guarantee, have come to be a far cheaper and convenient way for importer to raise credit.