Discounting of Bills by UCBs - Restricted Letters of Credit (LC) - आरबीआय - Reserve Bank of India
Discounting of Bills by UCBs - Restricted Letters of Credit (LC)
RBI/2011-12/476 March 30, 2012 The Chief Executive Officers of Madam / Dear Sir, Discounting of Bills by UCBs – Restricted Letters of Credit (LC) Please refer to our Circular UBD.No.BPD.PCB.Cir.37/13.05.00/2003-2004 dated March 16, 2004 wherein UCBs were advised, inter alia, that they should purchase / discount / negotiate bills under LCs only for their borrower constituents who have been sanctioned regular credit facilities. 2. The above instructions have been reviewed and it has been decided that in case of bills drawn under LCs restricted to a particular UCB, and the beneficiary of the LC is not a borrower who has been granted regular credit facility by that UCB, the UCB concerned may, as per their discretion and based on their perception about the credit worthiness of the LC issuing bank, negotiate such LCs, subject to the condition that the proceeds will be remitted to the regular banker of the beneficiary of the LC. However, the prohibition regarding negotiation of unrestricted LCs for borrowers who have not been sanctioned regular credit facilities will continue to be in force. 3. UCBs negotiating bills as above, under restricted LCs, would have to adhere to the instructions of the Reserve Bank / RCS or CRCS regarding sharelinking to borrowing and provisions of Co-operative Societies Act on membership. 4. The guidelines mentioned in para 2 above would be applicable from the date of this circular. All other instructions on discounting of bills under LC will remain unchanged. 5. Please acknowledge receipt of the circular to the Regional Office concerned. Yours faithfully, (A. Udgata) |