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Issue of Corporate Guarantee in lieu of Bid Bond Guarantee
A.P.
(DIR Series) Circular No. 41 dated 8th November 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).
Foreign
Exchange Management (Guarantees) (Amendment) Regulations, 2002
FEMA
Notification No. 56 dated 18th March 2002
In
exercise of the powers conferred by clause (i) of sub-section (3) of Section 6,
Sub-Section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42
of 1999) and in partial modification of its Notification No. FEMA 8/ 2000-RB
dated 3rdMay 2000, the Reserve Bank of India makes the following Regulations to
amend the Foreign Exchange Management (Guarantees) Regulations 2000, namely: -
1.
Short title & commencement: -
(i)
These Regulations may be called the Foreign Exchange Management
(Guarantees) (Amendment) Regulations, 2002.
(ii)
They shall come into force from the date of their publication in the
official Gazette.
2.
Amendment to the Regulation: -
In the Foreign Exchange Management
(Guarantees) Regulations, 2000 (hereinafter Referred to as �the said
Regulations�).
(i)
The existing Regulation 5, Sub-Regulation (a) shall be numbered as �(a)(i)�.
(ii)
After Sub-Regulation (a)(i) as so numbered, the following Sub-Regulation
shall be inserted, before Explanation, namely:-
(ii)
a person resident in India being an exporter company may give guarantee
in lieu of Bid Bond Guarantee, for bidding for a contract outside India without
the approval of the Approving Authority provided that the amount of such
guarantee shall not exceed 5% of the contract value.
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