Bank Guarantee / Tender Guarantee

A Bank Guarantee is a promise by a lending institution to cover a loss if a business transaction doesn’t unfold as planned. The buyer receives compensation if a party doesn’t deliver goods or services as agreed or fulfill contractual obligations.

Bank Guarantee may also be referred to as a bond. Bank guarantees from a reputable institution can help you establish business relationships, increase your access to cash flow and capital, protect your business from losses, and set you up for inland / international opportunities.

Types of Bank Guarantees
Here are several kinds of bank guarantees that cover various risks, including:
Performance bond guarantee: Serves as collateral for the buyer’s costs if services or goods are not provided as agreed in the contract.

Advance payment guarantee: Acts as collateral for reimbursing the buyer’s advance payment if the seller does not supply the specified goods per the contract.

Warranty bond guarantee: Serves as collateral, ensuring ordered goods are delivered as agreed.

Payment guarantee: Assures a seller the purchase price is paid on a set date.
Rental guarantee: Serves as collateral for rental agreement payments.

TENDER GUARANTEE
Tender Guarantee is a customary standby letter of credit or bank guarantee or surety issued by a Foreign Issuing Lender in favor of (actual or prospective) counterparties of the Parent Borrower or any of its Subsidiaries for the purpose of securing the obligations assumed under any tender, for construction work or other services.

Tender Guarantee is a bank guarantee issued by a bank or an Issuing Bank in each case in favor of (actual or prospective) counterparties of the Parent Client or any of its subsidiaries or any of its Joint Ventures for the purpose of securing the obligations assumed under any tender, for construction work or other services. Tender Guarantee means a bank guarantee, Government bond or securities recognized by the Government, provided to customer by tender participant prior to or during tender selection, or in the case of being selected, as a guarantee of concluding a contract.

Uses of Bank Guarantee
• When large companies purchase from small vendors, they generally require the vendors to provide guarantee certificate from banks before providing such business opportunities.

• Predominantly used in the purchase and sale of goods on credit basis, where the seller is assured of payment from the bank in case of default by the buyer.

• Helps in certifying the credibility of individuals, which in turn, enables them in obtaining loans and also assists in business activities.

“My Rupee Mantra” experts advise you in drafting and issuance Bank Guarantees. The experts find the best suited Bank for the client for issuance of Bank Guarantee at competitive terms and conditions. The recipient of a standby letter of credit or BG is assured that it is doing business with an individual or company that is capable of paying the bill or finishing the project.