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Bank Guarantee

A Bank Guarantee functions as a safety net for businesses or individuals involved in contracts, ensuring that the counterparty is protected in case of non-performance, default, or non-payment. The applicant (the party requesting the guarantee) requests the bank to issue the BG, and the beneficiary (the party receiving the guarantee) can invoke the BG if the applicant fails to meet their obligations.

Bank guarantees are often used in situations where financial risks need to be mitigated, and are issued by commercial banks to cover a wide range of obligations. The amount guaranteed is typically non-recoverable and is paid by the bank in the event of a default by the applicant.

Overview

  • Guarantee from a lending institution ensuring the liabilities of a debtor will be met.
  • Helping business growth and promoting entrepreneurial activity.

Features

    Contingent Liability
  • One Time: for a particular Contract; documents valid for only one guarantee
  • Running: Guarantee will be sanctioned like Cash Credit for the full tenure during which separate Letters of Guarantee will be issued within the sanctioned limit to different departments/institutions. Omnibus Counter Guarantee (Ann BG2A) will be obtained in this case
  • 18 months term available
  • Low commission applicable

Guarantee Type

    1.Financial Guarantee
  • Against Mobilization Advance given to a contractor for starting work on a project
  • Against advance given by a buyer for supply of raw materials
    • 2.Performance Guarantee:
  • In lieu of Security/Earnest Money for bidding activity
  • To honour a performance linked contract
  • For warranty period after completion of the project
  • For partial payment linked to stage wise completion
  • Related to civil liability cases pending in courts and also revenue dues

Charges

  • Click HERE> for more details about Deposit interest rates& Service charges.
  • For more quries please contact to your nearest branch.
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