Bank Guarantee

  • Bank Guarantee is a fee based credit facility which is also known as non-fund based credit facility extended by the banks to their customers.
  • The non-fund based facilities means issuance of letter of guarantee by the banks wherein banks get fee income and also there is no immediate outflow of funds from the banks.
  • However in case of non-fund based credit facility, the bank has to discharge the financial liability of the contract agreed in the guarantee or documentary credit, if the contract is partly or fully not performed by the customer
  • Bank issues Bank Guarantees, on behalf of their customers, in favor of third parties like Government Departments, Public- Sector Organisations, etc.
  • Bank issues both types of Guarantees viz. Performance Guarantee and Financial Guarantee.
  • The type of Guarantee, track record of customers and their financial position are the guiding factors in deciding the Guarantee limit, security and margin
Avail online service Click here..