(i)The pledging of securities or the giving of guarantees by banks and others in India to banks and others outside India for the purpose of grant of loans or overdrafts abroad is, prohibited except to the extent provided in sub-paragraphs (ii) and (iii) below.

(ii)Authorised dealers may grant through their overseas branches and correspondents,to Indian nationals or persons of Indian origin OCBs established in business or trade, loans and overdrafts against the security of fixed deposits or other assets in India, provided they are satisfied that such assets represent funds which had been previously remitted to India in an approved manner. Overseas branches and correspondents of authorised dealers can also accept shares/debentures of Indian companies as collateral for the purpose of granting loans/overdrafts to non-resident borrowers, provided these shares/debentures were acquired on repatriation basis out of remittance from abroad or funds held in NRE/FCNR accounts. Any remittance from India other than the sale proceeds of the shares held by the concerned NRIs on repatriation basis (net of applicable taxes, if any) to be adjusted for liquidation of outstandings in such loans or overdrafts accounts will, however, require prior approval of Reserve Bank. Grant of loans and overdrafts against security of fixed deposits with authorised dealers in NRE/FCNR accounts is governed by the provisions in Chapters 13 and 14.

(iii) Deleted.