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INDIA BUSINESS WORLD - NOVEMBER 1st – NOVEMBER 15th 2008
BANKS CAN ISSUE STANDBY LETTERS OF CREDIT TO GUARANTEE PAYMENT
The Reserve Bank gave approval to the banks to issue guarantee through standby letters of credit to cover payment obligations arising out of commodity derivative transactions to provide greater flexibility to companies. The board of the bank issuing guarantee will approve the policy on the nature and extent of exposure that the bank can take for such transactions and should be part of the credit exposure on the customers, RBI said.
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