Master Circular on Guarantees and Co-acceptances (2009)

What changed

RBI updated its previous Master Circular dated July 1, 2008 by incorporating all instructions issued on guarantees and co-acceptances up to June 30, 2009. The circular consolidates existing rules without introducing new policy changes. It serves as a single reference document for banks.

What it means for you

Banks now have a unified framework to manage guarantee and co-acceptance business, reducing ambiguity. The circular reinforces existing norms on unsecured exposure limits, fraud prevention, and internal controls. Lenders must ensure their guarantee portfolios align with these consolidated instructions to avoid regulatory gaps.

What banks were required to do at the time

• Review your bank's guarantee and co-acceptance policies against the Master Circular to ensure full compliance.
• Update internal training materials for staff handling guarantees, letters of credit, and co-acceptances.
• Strengthen internal control systems and fraud prevention measures as per Ghosh Committee recommendations referenced in the circular.
• Ensure all foreign exchange-related guarantees adhere to FEMA regulations outlined in the circular.

Who it affects

All scheduled commercial banks (excluding RRBs), Bank guarantee and letter of credit departments, Risk management and compliance teams, Foreign exchange operations teams