LoU ban to hit small & medium importers with higher funding costs: Report

The financial flexibility of Indian importers will be limited, leading to liquidity pressure and higher funding costs for small and medium enterprises, as a result of the ban on bank issue of letters of undertaking (LoUs) and letters of comfort (LCs), says India Ratings and Research (Ind-Ra) .
 
The Reserve Bank of India on March 14 issued the order in the wake of fraudulent LoUs issued by a public sector bank on behalf of diamond tycoons Nirav Modi and Mehul Choksi.
 
Total buyer credit for the top 160 importers was Rs 331 billion in 2016-17, of which Rs