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.
- Simple requirements
- Client obtains credit hence easing liquidity
- Immediate compensation in case of default
- 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