Reserve Bank of India (RBI) has informed that in order to provide operational flexibility and ease the procedures, it has been decided to permit Authorised Dealer (AD) Category-I banks to issue bank guarantee, without prior approval of the RBI, on behalf of a non-resident acquiring shares or convertible debentures of an Indian company through open offers/delisting/exit offers, provided:
i) the transaction is in compliance with the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) [SEBI (SAST)] Regulations;
ii) the guarantee given by the AD Category-I bank is covered by a counter guarantee of a bank of international repute. The guarantee shall be valid for a tenure co-terminus with the offer period as required under the SEBI (SAST) Regulations.
In case of invocation of the guarantee, the (AD) Category-I bank is required to submit to RBI, a report on the circumstances leading to the invocation of the guarantee.