Bank Guarantee for service importers
Towards further liberalising the procedure for import of services, AD Category-I banks are now permitted to issue guarantee for amount not exceeding USD 500,000 or its equivalent, in favour of a non-resident service provider, on behalf of a resident customer who is a service importer. This is allowed where (a) the AD Category-I bank is satisfied about the bona-fides of the transaction; (b) the AD Category-I bank ensures submission of documentary evidence for import of services in the normal course; and (c) the guarantee is to secure a direct contractual liability arising out of a contract between a resident and a non-resident.
In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval from the Ministry of Finance, Government of India for issuance of guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or its equivalent would be required.
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