CPSE may issue LOCs, Finance Ministry says

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CPSE may issue LOCs, Finance Ministry says

In March, the ministry had asked other ministries and departments not to issue a Letter of Comfort'' to any contractor that has undertaken projects on their behalf, as part of an effort to improve transparency in fiscal management.

In view of the foregoing and considering that the CPSE are important players in the infrastructure sector, it has been decided that CPSE may issue LOCs, an office memo issued by the ministry on June 10th said.

The finance ministry website laid down certain conditions on Monday, including that lender should be a NBFC Non-Banking Finance Company registered with RBI.

It said that NBFCs should be involved in the infrastructure sector and that LOCs should be provided by banks only for opening letter of credit for supply of goods and services by foreign suppliers.

Under no circustances, the liability under this LOC should be devolved on the government of India, it added.

The memo was approved by the finance secretary and secretary of expenditure.