Section 5 in The Foreign Exchange Management (Guarantees) Regulations, 2000
5. Guarantees which may be given by persons other than an authorised dealer .-A person other than an authorised dealer may give a guarantee in the following cases, namely:-
(a)[(i)] a person resident in India being an exporting company may give a guarantee for performance of a project outside India, or for availing of credit facilities, whether fund-based or non-fund based, from a bank or a financial institution outside India in connection with the execution of such project:Provided that the previous approval for undertaking the project has been duly obtained from the approving authority in India;(ii)[ a person resident in India being an exporter company may give guarantee in lieu of Bid Bond Guarantee, for bidding for a contract outside India without the approval of the Approving Authority provided that the amount of such guarantee shall not exceed 5% of the contract value.] [ Inserted by G.S.R. 575(E), dated 18.3.2002 (w.e.f. 19.8.2002).]Explanation .-For the purpose of this regulation, the "approving authority" means the authority referred to in regulation 18 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000.(b)[ (i) An Indian Party promoting or setting up outside India, a Joint Venture (JV) or a Wholly Owned Subsidiary (WOS), may give a guarantee to or on behalf of the latter in connection with its business:Provided that the terms and conditions stipulated in Foreign Exchange Management (Transfer and Issue of Foreign Security) (Amendment) Regulations, 2004 for promoting or setting up such company or subsidiary are continued to be complied with :Provided further that the guarantee under this clause may also be given by an authorized dealer in India;(ii)An Indian Party promoting or setting up outside India, a Joint Venture (JV) or a Wholly Owned Subsidiary (WOS), may give a guarantee to or on behalf of the first generation step down operating company in connection with its business:Provided that the terms and conditions stipulated in Foreign Exchange Management (Transfer and Issue of Foreign Security) (Amendment) Regulations, 2004 for promoting or setting up such company or subsidiary are continued to be complied with.Explanation: 'Indian Party' shall have the same meaning as assigned to it in Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2004.](c)an agent in India of a shipping or airline company incorporated outside India may give a guarantee on behalf of such company in connection with its obligation or liability owed to any statutory or Government authority in India.(d)[ a bank which is an authorised dealer may, subject to the directions issued by the Reserve Bank in this behalf, permit a person resident in India or on behalf such person to issue guarantee in favour of an overseas lender or security trustee to secure an external commercial borrowing availed under the provisions of the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 (Notification No. FEMA 3/2000-RB, dated 3-5-2000).] [Inserted by Notification No. G.S.R. 300 (E) dated 3.2.2009 (w.e.f. 11.7.2008)][Substituted by Notification No. G.S.R. 574 (E) dated 8.5.2013 (w.e.f. 27.5.2011)]
