Issue of Corporate Guarantee in lieu of Bid Bond Guarantee
AP (DIR Series) (2002-2003) Circular No. 41, dated 8-11-2002
Attention
of authorised dealers is invited to Regulation 5 of the Notification
No.FEMA.8/2000-RB dated May 3, 2000 in terms of which a person other than
authorised dealer is permitted to give a guarantee in certain types of cases.
2. Reserve
Bank has issued Notification No.FEMA.56/2002-RB dated March 18, 2002 (copy
enclosed) amending its Notification referred to above, allowing exporters,
desiring to submit bids for execution of projects abroad including service
contract to issue Corporate Guarantee in lieu of Bid Bond Guarantee subject to
the condition that the amount of such guarantee shall not exceed 5% of the
contract value. Exporters, however, have to ensure that provisions contained in
Memorandum PEM and other instructions issued by Reserve Bank from time to time
for submission of bids are complied with.
3. Authorised
Dealers may bring the contents of the circular to the notice of their
constituents concerned.
4. Necessary
amendments may be carried out in Notification No.FEMA.8/2000-RB dated May 3,
2000 as indicated in Notification No.FEMA.56/2002-RB dated March 18, 2002.
5. The
directions contained in this circular have been issued under section 10(4) and
section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999).