Bank Guarantee
An assurance that a bank will cover a borrower’s liability if default occurs.
Detailed Description
Bank Guarantee
What is a bank guarantee?
A bank guarantee is a financial instrument issued by a bank ensuring payment to a third party if the client fails to meet their contractual obligations.
What are the different types of bank guarantees?
Types include financial guarantees, performance guarantees, bid bond guarantees, advance payment guarantees, and customs guarantees.
What is the application process for obtaining a bank guarantee?
The process involves submitting an application, undergoing credit assessment, providing documentation, and receiving approval and issuance from the bank.
What are some benefits of using bank guarantees?
Benefits include risk mitigation, improved credibility, facilitated transactions, and easier access to financing.
What risks are associated with bank guarantees?
Risks include financial liability, potential impact on credit rating, and the possibility of fraud.