The Reserve Bank of India on Thursday said banks can grant non-fund-based facilities, including Partial Credit Enhancement (PCE), to those customers, who do not avail any fund-based facility from any bank in India, subject to conditions.
The central bank said banks should formulate a comprehensive Board-approved loan policy for grant of non-fund-based facility to such borrowers.
Banks should undertake the same level of credit appraisal as has been laid down for fund-based facilities.
The banks should ensure that the borrower has not availed any fund-based facility from any bank operating in India.
However, at the time of granting non-fund-based facilities, banks have to obtain declaration from the customer about the non-fund-based credit facilities already enjoyed by them from other banks.
So far, banks could open letters of credit (LCs) and purchase / discount / negotiate bills under LCs only in respect of genuine commercial and trade transactions of their borrower constituents who had been sanctioned regular credit facilities by the banks.