04 October 2011
Yes. FEMA does not restrict Indian company from obtaining foreign bank guarantee. It would depend on laws of that BG issuing country.
Generally it is observed that foreign bank gives SBLC to its Indian branch & then that Indian bank issues BG. Foreign bank has banking relation with company associated with indian company in its country.
04 October 2011
Pl explain tranx in detail. Why you require foreign BG?; How a foreign bank shall issue you BG? Any collateral or security asked by bank?
07 October 2011
In certain countries Banks are prohibited to give guarantees and as alternative they issue stand-by letters of credit. The guarantee on whose behalf it is issued should have arrangements/facilities with the issuing bank. Many Indian Banks have their correspondent banks abroad and your client can ascertain from his Bank whether they have any arrangements with the foreign bank for issuing guarantee/stand-by letter credit. Your client's bank will refer their Foreign Business Department and ascertain the possibility.
07 October 2011
The Reserve Bank vide its Notification No. FEMA.29/ RB-2000 dated September 26, 2000 has granted general permission to a resident, being a principal debtor to make payment to a person resident outside India, who has met the liability under a guarantee.
In cases where a Rupee loan is granted against the guarantee provided by a non-resident, there is no transaction involving foreign exchange until the guarantee is invoked and the non-resident guarantor is required to meet the liability under the guarantee. The non-resident guarantor may discharge the liability by i) payment out of rupee balances held in India or ii) by remitting the funds to India or iii) by debit to his FCNR(B)/NRE account maintained with an AD bank in India. In such cases the non-resident guarantor may enforce his claim against the resident borrower to recover the amount and on recovery he may seek repatriation of the amount if the liability is discharged either by inward remittance or by debit to FCNR(B)/NRE account. However, in case the liability is discharged by payment out of Rupee balances the amount recovered can be credited to the NRO account of the non-resident guarantor.
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