What is meaning of bank guarantee?
Bank Guarantee is a mode of satisfying an individual or a corporation into financial commitments in a business transaction between a buyer and a sellor. Bank Guarantee is a substitute for Earnest Money, Deposits required from a Contractor in executing a Work Order. Bank Guarantee is a commitment from a Bank on behalf of its Client to honour financial commitments in case of defaults. Letter of Credit is a negotiable instrument whereby the opening bank assures payment to another bank on behalf of its customer to pay the relevant sums of money mentioned therein subject of compliances of various documents / instructions contained therein. In the LC, the opening Bank honours the financial commitments when the terms contained are in order – to the negotiating bank without waiting for its Client to repay the amounts.
