What changed
The Master Circular has been updated to include all instructions on guarantees and co-acceptances issued by RBI up to March 31, 2025. It replaces the previous version dated April 1, 2024. The circular explicitly states it contains no new instructions or guidelines.
What it means for you
For banks, this is a compliance refresh—no new rules to implement, but the consolidated text must be used as the single reference for guarantee and co-acceptance policies. It reinforces existing norms like the 10-year maturity cap, precautions against fraud, and restrictions on guarantees for NBFC placements. Lenders should review their internal processes to ensure alignment with the consolidated instructions.
What you must do
- Replace the old 2024 Master Circular with this 2025 version in your compliance manuals.
- Review your bank's guarantee and co-acceptance policies to ensure they match the consolidated instructions.
- Train relevant staff (credit, trade finance, legal) on the updated circular, emphasizing no new changes but the need for strict adherence.
- Verify that all guarantee maturities comply with the 10-year cap and other maturity guidelines.
- Check that guarantees for NBFC or non-bank fund placements follow the existing restrictions.
Who it affects
All Scheduled Commercial Banks (excluding Payment Banks and RRBs), Credit and trade finance departments, Compliance and legal teams, Branch managers handling guarantee issuance
Does this Master Circular introduce any new requirements for guarantees?
No, it explicitly states it only consolidates instructions issued up to March 31, 2025, without adding new guidelines.
What is the maximum maturity allowed for a bank guarantee under this circular?
Bank guarantees should normally not have a maturity exceeding 10 years, as per the existing guidelines.
Which banks are excluded from the application of this circular?
Payment Banks and Regional Rural Banks (RRBs) are excluded from the scope of this Master Circular.