{"id":31948,"date":"2015-05-27T10:13:53","date_gmt":"2015-05-27T10:13:53","guid":{"rendered":"http:\/\/vskills.in\/certification\/blog\/?p=31948"},"modified":"2024-04-03T13:17:29","modified_gmt":"2024-04-03T07:47:29","slug":"bank-guarantees","status":"publish","type":"post","link":"https:\/\/www.vskills.in\/certification\/blog\/bank-guarantees\/","title":{"rendered":"Bank guarantees"},"content":{"rendered":"

\"Bank<\/a><\/p>\n

Bank guarantee is one of the facilities that the commercial banks extend on behalf of
\ntheir clients in favour o\u00a3 third parties who will be the beneficiaries of the guarantees. In
\nfact when a bank guarantee is given no credit is extended and banks do not part with
\nany funds. There will be only a guarantee to the beneficiary to make payment in the
\nevent of the customer on whose behalf the guarantee is given, defaulting in his
\ncommitment. So, if the customer fails to pay as per the terms of the guarantee, the
\nbanker giving the guarantee has to pay and claim reimbursement from his client. The
\nbanker\u2019s liability arises only if his customer fails to pay the beneficiary of the guarantee.
\nThat is why bank guarantee limits are known as non-borrowings limits or non-fund
\nlimits.
\nImportant features – The following points are to be considered regarding bank guarantee:<\/p>\n

    \n
  1. Guarantees should be for a definite period and as far as possible should not run
    \nfor more than one year.
    \n2The guarantees should be in respect of a definite object or enforceable on happening
    \nof a definite event.<\/li>\n
  2. Guarantee should be in respect of transactions which arise out of trade and
    \ncommerce, or any other genuine business.<\/li>\n
  3. Guarantees should be specific as to amount.<\/li>\n
  4. Guarantees should be covered by a counter guarantee by a customer giving the
    \nbank absolute right of payment under guarantee on the happening of contingency
    \nguaran-teed against.<\/li>\n
  5. Reliable credit reports should be obtained on the customers for whom the guarantee
    \nis given. Such reports should be kept uptodate.<\/li>\n
  6. The guarantees should as far as possible relate to the normal business of the
    \ncustomers. The banks will insist the customer to deposit the margin, depending on
    \ncase to case, before the issue of bank guarantees. The banks will charge
    \ncommission on bank guarantees issued or extended.<\/li>\n<\/ol>\n

    Click here for government certification in Accounting, Banking & Finance<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    Bank guarantee is one of the facilities that the commercial banks extend on behalf of their clients in favour o\u00a3 third parties who will be the beneficiaries of the guarantees. In fact when a bank guarantee is given no credit is extended and banks do not part with any funds. There will be only a…<\/p>\n","protected":false},"author":625,"featured_media":32016,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_joinchat":[],"footnotes":""},"categories":[1519],"tags":[4003,4004,4005,4006],"class_list":["post-31948","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting-banking-and-finance","tag-genuine-business","tag-guarantee","tag-reliable-credit-reports","tag-trade-and-commerce"],"acf":[],"yoast_head":"\nBank guarantees - Vskills Blog<\/title>\n<meta name=\"description\" content=\"Bank guarantee- a facilities of bank to their costumers. 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