Bank Guarantees

Bank Guarantee

A bank guarantee also known as assurity that provided by bank or financial institutions. Assurity word itself reflect that if a applicant who fails to pay loan as per agreed term on time, then what is bank guarantee or financial institutions take the responsibility to pay off loan to the concern parties. For better understanding we can say that lender assure the creditor through bank guarantee facility that suppose the applicant who unable to meet liabilities, at that place bank will take care of losses.

There are several types of Bank Guarantee as given in the followings:-

Deferred Payment Guarantee: - This type of payment guarantee the seller to get paid due payment without default by buyers bank.

Foreign Bank Guarantee: - On behalf of the borrowers bank provide foreign bank guarantee that bid bond shall be given as a proof of guarantee to project owner.

Financial Guarantee: - It’s a common type of financial guarantee in which guarantor takes the responsibility of coverage in case default in payment to lender.

Performance Guarantee: - Performance guarantee are given by lender in terms of compensation of money when performance in delivery are delayed.  

Bid Bond Guarantee: - This type of bid bond assures the compensation of bond owner if bidders fail to start project as per agree time frame.

Advance Payment Guarantee: - In this bank guarantee process lender take the responsibility of money to be repaid if the opposite party couldn’t able to complete project fully/entirely.