Bank Guarantee Form: Fill & Download for Free

Bank guarantee is a financial instrument—this can take on a variety of different forms. For example, direct guarantees are issued by banks in both domestic and foreign business. Indirect guarantees are commonly issued when the subject of the guarantee is a government agency or another public entity.The most common kinds of guarantees include:Shipping guarantees:Loan guarantees:Advanced payment guarantees:Confirmed payment guarantees:Types of Letters of Creditletters of credit also vary based on the need for them, like bank guarantee. The following are some of the most commonly used letters of credit:An irrevocable letter of creditConfirmed letter of creditImport letter of creditExport letter of creditRevolving letter of credit

A bank guarantee, like a letter of credit, guarantees a sum of money to a beneficiary. The bank only pays that amount if the opposing party does not fulfill the obligations outlined by the contract. The guarantee can be used to essentially insure a buyer or seller from loss or damage due to nonperformance by the other party in a contract. Bank guarantee is a financial instrument—this can take on a variety of different forms. For example, direct guarantees are issued by banks in both domestic and foreign business. Indirect guarantees are commonly issued when the subject of the guarantee is a government agency or another public entity.

1. Cash Credit: This facility will be given by the banker to the customers by giving certain amount of credit facility on continuous basis. The borrower will not be allowed to exceed the limits sanctioned by the bank.2. Bank Overdraft: It is a short-term borrowing facility made available to the companies in case of urgent need of funds. The banks will impose limits on the amount they can lend. When the borrowed funds are no longer required they can quickly and easily be repaid. The banks issue overdrafts with a right to call them in at short notice.3. Bills Discounting: The Company which sells goods on credit will normally draw a bill on the buyer who will accept it and sends it to the seller of goods. The seller, in turn discounts the bill with his banker. The banker will generally earmark the discounting bill limit.4. Bills Acceptance: To obtain finance under this type of arrangement a company draws a bill of exchange on bank. The bank accepts the bill thereby promising to pay out the amount of the bill at some specified future date.5. Line of Credit: Line of Credit is a commitment by a bank to lend a certain amount of funds on demand specifying the maximum amount.6. Letter of Credit: It is an arrangement by which the issuing bank on the instructions of a customer or on its own behalf undertakes to pay or accept or negotiate or authorizes another bank to do so against stipulated documents subject to compliance with specified terms and conditions.7. Bank Guarantees: Bank guarantee is one of the facilities that the commercial banks extend on behalf of their clients in favor of third parties who will be the beneficiaries of the guarantees..This answer is taken from CA FINAL SFM Faculty CA Aaditya Jain sir’s book.