Monday, June 1, 2015

Conditions for the Issuance of Bank Guarantees

Bank Guarantee is an additional tool to fulfill the obligations under the contract. Simply put, it’s kind of the way the creditor, not sure about the solvency of the borrower, to protect themselves against default by the debtor to pay the debt. In this case, the lender pays a fixed amount the bank. This is a lucrative way of reducing risks to zero during the transactions. The Bank Guarantee is a deal and banking. Issuance of Bank Guarantee is made in the provision of the appropriate organization of the necessary documents. The procedure for issuing a Bank Guarantee.

  • The subject composition of a bank guarantee to guarantee, the principal and the beneficiary.
  • Guarantor – a person who issues a written document, which contains the commitment to pay a sum of money.
  • Principal – is the debtor of the obligation.
  • Beneficiary – a creditor of the principal, in his favor given the guarantee.

The Bank Guarantee is issued at the request of the principal guarantor. The meaning of guarantees is that it provides the proper performance of obligations to the debtor by the creditor. The order of issue is quite simple: the principal guarantor of the agreement concluded with the issuance of Bank Guarantee, pursuant to which the bank issues a guarantee for certain conditions.

Conditions for issuing a Bank Guarantee

Conditions for issuing a Bank Guarantee are defined in the agreement, which entered into between the guarantor and the principal. Also, the Agreement establishes the procedure for issuing a Bank Guarantee, the guarantor and the principal settlements on the first payment of remuneration, the right of recourse to the guarantor of the debtor, the scope and implementation. In order to obtain a Bank Guarantee, you need to know how much money will need to ensure that the transaction, as well as an understanding of the conditions of the beneficiary, if these conditions are. Next, you need to collect documents for submission to the bank or credit institution. Each bank is different this package, it largely depends on what the base monetary obligation of the debtor to the creditor.

 Bank Gurantee
Bank Gurantee
But mandatory are the following items:

  • Opening a bank account
  • Welfare and security
  • Provision of financial statements

A prerequisite for obtaining a Bank Guarantee is to provide a guarantor of the financial condition of the principal. That’s what is necessary to collect all necessary and requested by the bank or credit institution documents.

For More Information: Click Here