RBI report calls for caps on state government guarantees

The Reserve Bank of India (RBI) has released a report calling for new restrictions on guarantees provided by state governments for project loans, and a complete prohibition on guarantees for the private sector. The report, issued by a working group, states that it is necessary to set a reasonable limit on the issuance of guarantees by state governments. The group has recommended that the ceiling for guarantees issued in a year should be either 5% of the state's revenue receipts or 0.5% of the state's gross domestic product, whichever is lower.

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