The Finance Ministry has asked the RBI to look into the problems being faced by industry and banks following the abrupt ban on LoUs and provide some breathing space to them, sources said.
The Reserve Bank of India (RBI) this month banned the issuance of letters of undertaking (LoUs) and letters of comfort (LoC), used extensively for trade finance, following the unearthing of Nirav Modi fraud case.
Nirav Modi and associates, in connivance with some officials of the Punjab National Bank (PNB), used the LoUs to defraud the lender of more than ₹13,000 crore.
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