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    Bank Guarantee

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    harshvarma
    A bank guarantee is a one-way contract between a bank as the guarantor and a beneficiary as the party to whom a guarantee is made. A bank guarantee is a guarantee made by a bank on behalf of a customer (usually an established corporate customer) should it fail to deliver the payment, essentially making the bank a co-signer for one of its customer's purchases. for more information visit:- http://www.numerouno.net.in/bank_guarantee.html

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    Bank Guarantee

    Uploaded by

    harshvarma
    142 views7 pages
    A bank guarantee is a one-way contract between a bank as the guarantor and a beneficiary as the party to whom a guarantee is made. A bank guarantee is a guarantee made by a bank on behalf of a customer (usually an established corporate customer) should it fail to deliver the payment, essentially making the bank a co-signer for one of its customer's purchases. for more information visit:- http://www.numerouno.net.in/bank_guarantee.html

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    A bank guarantee is a one-way contract between a bank as the guarantor and a beneficiary as the party to whom a guarantee is made. A bank guarantee is a guarantee made by a bank on behalf of a customer (usually an established corporate customer) should it fail to deliver the payment, essentially making the bank a co-signer for one of its customer's purchases. for more information visit:- http://www.numerouno.net.in/bank_guarantee.html

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    142 views7 pages

    Bank Guarantee

    Uploaded by

    harshvarma
    A bank guarantee is a one-way contract between a bank as the guarantor and a beneficiary as the party to whom a guarantee is made. A bank guarantee is a guarantee made by a bank on behalf of a customer (usually an established corporate customer) should it fail to deliver the payment, essentially making the bank a co-signer for one of its customer's purchases. for more information visit:- http://www.numerouno.net.in/bank_guarantee.html

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 7
    At a glance
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    The key takeaways are that a bank guarantee provides a third party guarantee for business transactions and ensures debts will be paid if the debtor defaults. It helps build trust between parties, especially across different countries.

    The different types of bank guarantees discussed are direct guarantee, indirect guarantee, advance payment guarantee, performance guarantee, payment guarantee, and conditional payment guarantee.

    A direct guarantee is issued directly to the beneficiary, while an indirect guarantee involves a second bank issuing the guarantee in exchange for a counter-guarantee from the original bank.

    N um eroU no

    Bank Guarantee

    Bank G uarantee

    When running a business, you might come


    across a situation that your client may ask
    you to provide a financialguaranteefrom a
    third party. In such circumstances, approach
    yourbankand ask it to stand as a
    guarantor on your behalf. This concept is
    known asbank guarantee(BG).
    A guarantee from a lending institution
    ensuring that the liabilities of a debtor will
    be met. In other words, if the debtor fails to
    settle a debt, the bank will cover it.
    When strangers do business with each
    other, trust is the glue that holds the
    transaction together. When parties to a
    transaction are located in different
    countries, the concern arises that an
    aggrieved party might not be able to
    enforce its legal rights. In such transactions,
    trust is easier to maintain if a third party is
    willing to guarantee protection of the
    parties' potential liabilities. Banks offer

    Types of Bank G uarantee


    Indirect Guarant
    ee
    Advance Payment Guaran
    Advance Payment Guarantee
    tee
    Performance Guarante
    Performance Guarantee (Performance bond)
    e
    Payment Guarantee
    Payment Guarantee
    Indirect Guarantee

    Conditional Payment Guarantee


    Guarantee Securing a Credit Line
    Order & Counter Guarantee

    Conditional Payment Guaran


    tee
    Credit line Guara
    ntee
    Order & counter Guarante
    e

    Click here for more infor


    mation

    Direct Guarantee

    Direct
    Guarantee

    Bank
    Guarantee

    D irect G uarantee & Indirect G uarantee


    A Direct Guarantee where the account holder instructs
    his bank to issue a Guarantee directly in favor of the
    Beneficiary.
    An Indirect Guarantee where a second bank is
    requested to issue a Guarantee in return for a counterGuarantee. In this caseAdvance
    the Issuing Bank
    indemnify
    Paymwill
    ent
    losses made by this second bank in the event of claim
    G uarantee
    against the Guarantee
    An advance payment bond ensures repayment to the
    importer of any advance payments they havemade (usually
    an agreed percentage of the contract amount (typically
    10%-30%) if the exporter does not fulfill its contractual
    obligations.)
    This enables the employer to get a refund of advance
    payments made in the event of default by the contractor. It
    is issued for the full amount of the advance payment, but
    may contain reduction clauses, which enable a reduction in
    the maximum amount upon evidence of progressive
    performance.

    Perform ance G uarantee


    A performance bond safeguards the importer should
    the exporter fail to meet its contractual obligations.
    Performance bonds are usually issued for 10% to 20%
    of the contract amount but may be fixed by the local
    law of the importer's country.
    Performance Guarantee Normally issued for an
    amount equal to between 5 and 10 percent of the
    contact value, this guarantee assures payment to the
    employer in the event that the contractor fails to fulfil
    Paym ent G uarantee
    contract obligations.
    A payment guarantee ensures payment to the exporter if
    the importer does not fulfill its payment obligations.
    A payment guarantee can be issued in the form of an
    endorsement on a draft, also known as an aval.

    ConditionalPaym ent G uarantee


    Aconditional bank guaranteecan be where the
    issuingbankis only liable upon proof of a breach of
    the contract by the builder, and where the proprietor
    sustains a loss as a result of the breach.2 In this
    situation, the issuingbank'sliability only arises
    following a default by the builder under the contract.

    Credit Line G uarantee


    If you intend to monetize or credit line a Bank Guarantee
    that you have received (or due to receive), it is important to
    ensure that the Guarantee contains no onerous conditions
    and that it is worded specifically for monetizing. Draft Bank
    Guarantee wordings specifically used for securing credit
    lines. These draft documents are accepted by mainstream
    banks for monetizing.

    For M ore Inform ation Visit H ere :


    NumeroUno Bank Guarantee
    Corporate Office:
    No. 109/1B, Varun Arcade, 1st Floor,
    Nr. Laukim Industries, Opp. R-Mall,
    Ghodbunder Road, Thane (W) 400 610
    Maharashtra, INDIA
    Call Us: +91 22 2589 2955
    Email:[email protected]
    Websits:http://www.numerouno.net.in/bank_guarant
    ee.html

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