RBI bars banks from issuing LoUs in Nirav scam fallout

The Reserve Bank of India on Tuesday barred banks from issuing guarantees in the form of letters of undertaking (LoU). The move comes weeks after fugitive jeweller Nirav Modi and his uncle Mehul Choksi allegedly committed India’s biggest bank fraud. The RBI also banned with immediate effect issuance of letters of comfort which, like LoUs, are used by importers to fund their overseas purchases. However, letters of credit and bank guarantees will continue upon meeting certain conditions, the central bank said in a press statement. Companies belonging to Modi and Choksi allegedly colluded with em