Banks and non-bank financial institutions have been allowed to give out local currency loans to foreign companies against overseas guarantees without taking prior approval from the central bank.
The central bank eased the rule yesterday given the ongoing coronavirus pandemic, according to a notice. The new rule will be in force until June 30, 2021.
The rule relaxation aims at facilitating easy access to loans against external guarantees, a central bank official said. No fees will be payable against the guarantees.
The central bank would have to be informed immediately in case of encashment of guarantees due to the payment default by borrowers.
Permission from the central bank will be required in case of payment abroad of the amount encashed by lenders.