The Reserve Bank of India (RBI) has issued new rulings meant to stimulate growth after a thorough review of credit policy.

The new rulings include revised arrangements for letter of credit (L/C) transactions.

L/C limit

Banks are now allowed to issue guarantees or L/Cs for imports up to the value of US$100,000 provided only that the transaction secures a direct contractual liability arising out of a contract between a resident and a non-resident.

Amongst other highlights following the credit policy review, Indian banks may now be able to borrow around US$16 billion from overseas markets to boost their capital.

Overseas funds

At prevailing exchange rates, Indian banks may gain access to additional funds of around US$8 billion.

This follows the RBI's decision to increase the limit for Indian banks to borrow funds from their overseas branches, correspondent banks and overdrafts from their head office or nostro account.

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