Bank Guarantee
A bank guarantee is a type of financial commitment made by a bank on behalf of a customer, ensuring that specified financial obligations of the customer will be met in the event that the customer fails to fulfill them. It's a form of risk mitigation often used in business transactions to reassure one party (the beneficiary) that they will receive payment or compensation if the other party (the applicant) fails to meet their contractual obligations.
Non Collateral - Non Cash back & Cash Back
Types of Bank Guarantees:
There are different types, including bid bond guarantees, performance guarantees, advance payment guarantees, and financial guarantees, each serving a specific purpose in business transactions.
Purpose:
Bank guarantees are commonly used in international trade, construction projects, real estate transactions, and other commercial dealings where parties may be concerned about fulfilling contractual obligations.
Mechanism:
When a bank issues a guarantee, it undertakes to pay a specified amount to the beneficiary if the applicant fails to fulfill their obligations. The beneficiary can claim payment under the guarantee by presenting compliant documents proving the failure of the applicant to meet their obligations.
Cost:
Banks typically charge fees for issuing guarantees, which can be a percentage of the guaranteed amount and may also involve collateral or security from the applicant
Legal Aspects:
Bank guarantees are legally binding documents governed by the terms and conditions specified in the guarantee itself. Disputes regarding guarantees can be complex and may involve legal proceedings
International Trade:
In global trade, bank guarantees provide security to both importers and exporters, ensuring that contractual terms are met even if parties are located in different countries with differing legal systems.
Overall, bank guarantees are issued between banks through SWIFT communication with agreed verbiage format, providing assurance to parties involved that their contractual obligations will be fulfilled or compensated for as agreed.
The following banks / Financial Institutions are working under Partnership basis:
1. Asia Pacific Investment Bank 5. HSBC Bank PLC
2. ACE Investment Bank 6. Society General Bank PLC
3. Barclays Bank PLC 7. Suisse Bank PLC
4. Deutsche Bank AG 8. UBB Investment Bank
Important Terms and Conditions:
1) The applicable fee always differs between 3.00% to 11.00% depending on the transaction, Face Vale, Country, Client's Profile and so on.
2) All the payments are payable to the Participating Bank / Financial Institutions as per Invoice
3) The client must submit the copy of Contract, Purpose, or if any specific format to be issued
4) The client should disclose correct information to manage and support long term relationship basis.
5) Minimum Face Value between $ 0.50 Million to $ 200 Million