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Post-scam, RBI stops issue of LoUs
What happened?
- In the wake of an escalating controversy over the Nirav Modi-centred scam at the Punjab National Bank (PNB), the Reserve Bank of India (RBI) has decided to discontinue the practice of providing guarantees by issuing letters of undertaking (LoUs) and letters of comfort (LoCs) for trade credits for imports to India with immediate effect.
- The decision will apply to AD (authorised dealer) category-I banks.
