Bank Guarantees

A bank guarantee is a financial instrument that ensures the fulfilment of an obligation. It provides security to the beneficiary in case of non-performance by the guarantor.

Types of Bank Guarantees:

• Deferred Payment Guarantee: Guarantees payment to the seller for goods or services delivered on credit.
• Financial Guarantee: Protects against financial losses due to project non-completion.
• Advance Payment Guarantee: Assures the buyer of refund in case of non-delivery of goods or services.
• Foreign Bank Guarantee: Issued by a foreign bank on behalf of a domestic borrower.
• Performance Guarantee: Ensures project completion as per agreed terms and conditions.
• Bid Bond Guarantee: Guarantees a bidder’s ability to fulfill a contract if awarded.