K-Rep
Bank guarantees are written irrevocable undertaking issued by the
bank to pay to the beneficiary a specific sum of money on demand in
the event that its customer (applicant) has not fulfilled his
contractual obligations, within the validity of the guarantee.
Guarantees can be local or foreign.
Common
types of guarantees
- Tender/Bid
bond:
guarantees that the bidder will take up the contract (usually 2-5%
of the contract value)
- Performance
Bond:
guarantees that good/services provided will be of required standard
(usually10% of the contract value)
- Advance
Payment:
undertakes to refund any advance payments made to the beneficiary if
the goods/services are unsatisfactory or supplier fails altogether
- Shipping
guarantees:
covers a missing Bill of Lading enabling importer clear goods
- Payment
guarantee:
guarantees that payment will be paid to the beneficiary for goods
/services given on credit or against cheques.
Benefits
- Simple
requirements
- Client
obtains credit hence easing liquidity
- Immediate
compensation in case of default
Requirement
- A
guarantee credit facility or cash margin
- Customer's
request duly signed
- Bank'
s Counter Indemnity Form duly signed, sealed where applicable,
witnessed and stamped
- Format
of guarantee, where available
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