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RBI/2006-2007/148
DBOD.No.Dir.BC. 35 /13.07.10/2006-2007
October 11, 2006
Ashwina 19, 1928
All Scheduled Commercial Banks
(excluding RRBs)
Dear Sir
Guarantees and Co-acceptances
Please refer to paragraph 2.5(iii) of our Master
Circular DBOD.No.Dir.17/
13.03.00/2006 dated July 1, 2006 on the above subject, in terms of which
banks were advised that it is binding on the part of the beneficiary of the
guarantee to seek confirmation of the controlling office/head office as well,
for which a specific stipulation be incorporated in the guarantee itself.
2. It has been brought to
our notice that the beneficiaries of guarantees issued by banks are reluctant
to accept the guarantees issued with the above stipulation, resulting in loss
of business to banks. It has also been suggested that the clause may be deleted.
3. The suggestion has been
examined and accepted. Accordingly, it has been decided to delete item (iii)
of paragraph 2.5 of the Master Circular, with immediate effect. However, banks
may, while forwarding guarantees caution the beneficiaries that they should,
in their own interest, verify the genuineness of the guarantee with the issuing
bank.
Yours faithfully
(P.Vijaya Bhaskar)
Chief General Manager
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