Acceptances, Endorsements and Other Obligations
This item includes the following balances:
(a) letters of credit opened by the bank on behalf of its customers; and
(b) Bills drawn by the bank’s customers and accepted or endorsed by the bank (to provide security to the payees).
The total of all outstanding letters of credit as reduced by the cash margin and after deducting the payments made for the bills negotiated under them should be included in the balance sheet. In case of revolving credit, the maximum permissible limit of letters of credit that may remain outstanding at any point of time as reduced by the cash margin should be shown. If the transactions against which the letter of credit was opened have been completed and the liability has been marked off in the books of the bank, no amount should be shown as contingent liability on this account.