RBI bans all Indian banks from issuing LoUs, LoCs

PNB fraud case RBI discontinues system of issuing Letters of Undertaking system

The apex bank in its notification said,"It has been made a decision to discontinue the practice of issuance of LoUs/ LoCs for Trade Credits for imports into India by AD Category -I banks with immediate effect". Bankers say the scrapping of LoU/LoC is unlikely to impact trade credit as banks can issue Letters of Credit (LC) and Bank Guarantees for trade credits for imports.

The RBI has taken other fraud-control measures like bringing out a framework for dealing with loan frauds above Rs 50 crore, creating an online Central Fraud Registry, issuing caution advice detailing names of fraudsters and their modus operandi and ordering banks to re-verify the title deeds for all credit exposures above Rs 5 crore.

In today's plea before the special CBI court, the agency said it has filed another supplementary complaint about additional fraud of Rs 942 crore, taking the total amount of fraud to Rs 7,080 crore.


The RBI decision could potentially push up the cost of imports by up to half a percentage point, besides putting foreign banks on an even keel with Indian banks in financing imports, bankers said. "This is clearly a risk mitigating step as letter of credit are governed by Uniform Customs and Practice for Documentary Credits, which has a well defined set of rules and procedures", said a senior official at one of the public sector banks. They did not have any pre-approved credit limit either. "In the case of LCs for import of goods, banks should be very vigilant while making payment to the overseas suppliers on the basis of shipping documents".

The Finance Minister Arun Jaitley, on Tuesday, in a written reply to the Rajya Sabha revealed that Nirav Modi obtained his first fraudulent guarantee from PNB's Brady House branch in Mumbai on March 10, 2011 and managed to get 1,212 more such guarantees over the next 74 months, reported in PTI.

Related News:



Most liked

Tottenham's Kane out until end of April
The injury occurred after a collision with Bournemouth goalkeeper Asmir Begovic in the first half at Dean Court. England will face Tunisia, Belgium and Panama in the World Cup group stage in Russian Federation .

Eagles release veteran TE Brent Celek
But his production has waned in recent seasons and the Eagles will save $4 million in salary cap space by releasing him. And as the Eagles aim to situate themselves as perennial contenders, they become more appealing to veterans like Ngata.

Federer, Cilic, Del Potro advance in Indian Wells, Djokovic out
He had surgery in Switzerland shortly after that. "And not to mention as well, I've played so many tournaments as a kid here. Yuki Bhambri of India pulled off a surprise when he toppled ninth-seeded Frenchman Lucas Pouille 6-4 6-4.

Bengals bolster O-line in trade with Bills, move back in draft
If the teams finalize the deal by Sunday, the Bills will save $4.85 million against the 2018 cap, according to the Buffalo News . Many thought the Bengals may use their 12th overall pick on a tackle, or an offensive lineman of some sort at the very least.

Malcolm Butler To Sign With Titans For Five Years, $61 Million
Butler spent the first four seasons of his career in New England, making the Pro Bowl once and winning two Super Bowls . Butler will join Logan Ryan as former Patriots cornerbacks to sign with the Titans in consecutive offseasons.

Nigeria negotiating for release of abducted schoolgirls
I think this is the best way to help the Nigerian government to get these girls released, which we hope will be done peacefully. We will also support opportunities to expand the economy, commercial investments, and peaceful polls in 2019, " he added.

Albert Wilson to sign three-year deal with Dolphins
In four seasons with the Chiefs he caught 124 passes for 1,544 yards, including 42 receptions for 554 yards past year . Reserve safety Walt Aikens is discussing re-signing with Miami, the person said, and is likely to reach a deal.

Caruso loses Tirreno-Adriatico lead in Filottrano
Courtesy of our partners Prendas Ciclismo, we are giving away a free jersey from their retro collection. Dennis was quickest on the 10-kilometer (6.2-mile) individual time trial in San Benedetto del Tronto.

Trudeau considering more action to keep foreign dumped steel out of Canada
Reacting to Trump's urge, Trudeau told CNN that Canada is glad to see the U.S. is eager to seal the deal. He was to also visit three Canadian steel cities this week to reassure workers.

BP Midstream Partners (NYSE:BPMP) Earns Media Sentiment Rating of 0.18
It improved, as 17 investors sold EQM shares while 55 reduced holdings. 8 funds opened positions while 14 raised stakes. Another trade for 353 shares valued at $49,981 was bought by DiSimone Harry . (NYSE:HD) shares were sold by Carey Matt.

Here's the first look of Sonam - Dulquer's 'Zoya Factor'!
The screenplay has been penned by Neha Rakesh Sharma, and the dialogues are written by Pradhuman Singh. Kerala's hit churning machine did a photo shoot with leading lady Sonam Kapoor to confirm the news.

Amazon Recalls own brand battery chargers after 53 failures
Amazon is sending out emails to those who have purchased the power banks, recommending they immediately stop using them. Those are model numbers B00ZQ4JQAA, B00LRK8JDC, B00LRK8IV0, B00LRK8I7O, B00LRK8EVO and B00LRK8HJ8.

CDC says missing doctor not passed over for promotion
O'Connor was sure Cunningham was upset over the lack of promotion because he allegedly shared the news with co-workers. Crime Stoppers said the money is for information "that points to criminal activity in the disappearance".

Kerala alert for fishermen as low pressure intensifies
Officials have been asked to be ready and, if necessary, coastal relief shelters would be opened at short notice. Coastal control rooms have been directed to remain operational 24x7 till Thursday.

Forest fire kills 10 hikers in Tamil Nadu
The Indian Air Force (IAF) was pressed into action by the Defence Minister after reports of the forest fire surfaced. Kurangani-Kozhukumalai hills in the Western Ghats are located near Bodinayakanur, about 40 kms from here.