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Question

Which of the following statements are not true regarding the issuance of a bank guarantee?

1. All bank guarantees have an expiry period and expiry date.

2. Banks are required to maintain capital against the non-fund-based facilities like Bank Guarantee

3. Banks should comply with Ghosh Committee recommendations while issuance of bank guarantee

4. The banks are not allowed to issue bank guarantee in favor of other banks and financial institutions.

A Both 1 and 2 Correct Answer Incorrect Answer
B Only 3 and 4 Correct Answer Incorrect Answer
C Only 4 is incorrect Correct Answer Incorrect Answer
D All are correct Correct Answer Incorrect Answer
E All are incorrect Correct Answer Incorrect Answer

Solution

Banks can issue bank guarantees in favor of other banks and financial institutions. Rest of the statements are correct.

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