Issuance of guarantees on behalf of residents in favor of non-residents

FEPD Circular – 26
The issuance of guarantees on behalf of residents in favor of non-residents is regulated by the Guidelines for Foreign Exchange Transactions (GFET), allowing Authorized Dealers (ADs) to issue bid and performance bonds for international tenders and trade. ADs may now also issue performance bonds for residents, including subcontractors, to facilitate export trade and local deliveries against foreign payments. ADs must conduct due diligence on applicants and ensure adherence to credit norms, including limits on borrower exposure and ensuring proper repatriation of remittances.