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FOREIGN EXCHANGE MANAGEMENT (GUARANTEES) REGULATIONS, 2000
Notification
No. 8 dated 3rd May 2000
GSR
391 (E), dated 3.5.2000: In exercise of the powers conferred by
clause (j) of sub-section (3) of section 6, sub-section (2) of section 47 of the
Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank makes the
following regulations, namely: -
(i)
These regulations may be called the Foreign Exchange Management
(Guarantees) Regulations, 2000.
(ii)
They shall come into force on 1st day of June 2000.
In
these regulations, unless the context requires otherwise, -
(i)
�Act� means the Foreign Exchange Management Act, 1999 (42 of 1999);
(ii)
�authorised dealer� means a person authorised as an authorised dealer
under sub-section (1) of section 10 of the Act;
(iii)
the words and expressions used but not defined in these regulations shall
have the same meanings respectively assigned to them in the Act.
Save
as otherwise provided in these regulations, or with the general or special
permission of the Reserve Bank, no person resident in India shall give a
guarantee or surety in respect of, or undertake a transaction, by whatever name
called, which has the effect of guaranteeing, a debt, obligation or other
liability owed by a person resident in India to, or incurred by, a person
resident outside India.
(1)
A authorised dealer may give a guarantee in respect of any, debt,
obligation or other liability incurred by a person resident in India and owed to
a person resident outside India, in the following cases, namely: -
where the debt, obligation or other
liability is incurred by the person resident in India, -
(i)
as an exporter, on account of exports from India;
(ii)
as an importer, in respect of import on deferred payment terms in
accordance with the approval granted by the Reserve Bank for import on such
terms.
(2)
An authorised dealer may give a guarantee in respect of any debt,
obligation or other liability incurred by a person resident outside India, in
the following cases, namely: -
(i)
where such debt, obligation or liability is owed to a person resident in
India in connection with a bona fide trade transaction:
Provided
that the guarantee given under this clause is covered by a counter-guarantee of
a bank of international repute resident abroad;
(ii)
as a counter-guarantee to cover guarantee issued by his branch or
correspondent outside India, on behalf of Indian exporter in cases where
guarantees of only resident banks are acceptable to overseas buyers.
(3)
An authorised dealer may, in the ordinary course of his business, give a
guarantee in the following other cases, namely:
(i)
on behalf of his customer or branch or correspondent outside India in
respect of missing or defective documents, or authenticity of signatures;
(ii)
in favour of organisations outside India issuing travellers cheques
stocked for sale in India by the authorised dealer or by his constituents who
are authorised persons.
A
person other than an authorised dealer may give a guarantee in the following
cases, namely:
(a)
a person resident in India being an exporting company may give a
guarantee for performance of a project outside India, or for availing of credit
facilities, whether fund-based or non-fund based, from a bank or a financial
institution outside India in connection with the execution of such project:
Provided
that the previous approval for undertaking the project has been duly obtained
from the approving authority in India;
Explanation-
For the purpose of this regulation, the �approving authority�
means the authority referred to in Regulation 18 of Foreign Exchange
Management (Export of Goods and Services) Regulation, 2000.
(b)
a company in India promoting or setting up outside India, a joint venture
company or a wholly-owned subsidiary, may give a guarantee to or on behalf of
the latter in connection with its business:
Provided
that the terms and conditions stipulated in Foreign Exchange Management
(Transfer and Issue of Foreign Security) Regulations, 2000 for promoting or
setting u
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