How is bank gurantee issued by bank ?



I need a bank gurantee to submit to my employer in foreign country . The bank gurantee should issue in favour of my employer for 1 year period with specific conditions . What is the basic requirement to issue this gurantee for a bank.

one is to deposit full proportinate amount. ! what else ?
Do the employer also need to have an account to issue the bank gurantee ?

How is bank gurantee issued by bank ?
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8 Replies to “How is bank gurantee issued by bank ?”


  1. BGs are possible against
    Properties
    CDs – certificate of deposit
    SKR’s – Safe Keeping receipts and
    LCs and MTNs

    PS: It depends from bank to bank.
    If its for a heavy amount , u can also buy a seasoned BG for some percentage less than its face value.

    The best way to get for you is to go for deposit, coz it may be a little amount and you are not trading with issued BG. Contact your bank where you have your business account.


  2. BG FOR LEASING-

    1.

    The Lessee submits this LOI/Contract with full banking coordinates client’s information Sheet (Addendum ‘A’), Corporate Board Resolution (Addendum ‘B’), Fee Protection Agreement (Addendum ‘C’) and Clear color copy of the Lessee’s Signatories Passport;
    2.

    The Lessor signs this LOI/Contract providing Lessor’s full banking coordinates and returns it to the Lessee. The LOI/Contract upon being signed and returned by the Lessor to the Lessee shall then become a formal legally binding Contract between both parties;
    3.

    After signing and returning of this LOI/Contract, both parties shall lodge the LOI/Contract with their respective banks;
    4.

    Within Three (3) International banking days the Lessee shall officially inform the Lessor by E-Mail/Fax the “Window Time” to send “S.W.I.F.T. MT-199” to the Lessor’s Bank. The Lessors will advise their own bank the readiness to receive the MT-199 (Addendum ‘D’) at the appointed “Window Time”” the Lessee shall cause its Bank to SWIFT the verifiable MT-199 without delay;
    5.

    Lessor’s Bank will verify Authenticate and validate the received Funding Instrument MT-199 Within Three (3) banking days, Lessor’s bank will issue a SWIFT Pre-advice message (Addendum ‘E’) to Lessee’s Bank confirming that Lessor’s Bank is RWA to deliver a BANK GUARANTEE (Addendum ‘F’) in the attached text to the Lessee, providing that Lessee’s Bank will issue a SWIFT MT-103/23 to settle account;
    6.

    Within three (3) Banking days, Lessee’s Bank will send the Swift MT-103/23 (Addendum ‘G’) to the Lessor’s bank for the first tranche payment;
    7.

    Within three (3) banking days, upon successful verification, Lessor’s bank will transmit the Bank Guarantee Instrument via SWIFT MT760 to Lessee’s Bank containing CUSIP Registration Numbers, Custodial Safe Keeping Receipt Numbers, ISIN Numbers, Term, Text of Instruments, Denominations, Name(s) of Issuing Banks(s), Date of Issue, Date of Maturity, Access Code and all pertinent data necessary for the Lessee’s Bank to authenticate and validate the data of the Instrument via Euroclear or DTC including a guarantee from the Lessor’s Bank to deliver the Instruments;
    8.

    Lessee’s Bank will authenticate and validate the Bank Guarantee Instrument and confirm satisfaction to Lessor’s Bank marking the conclusion of the delivery of the first tranche. Lessee’s bank shall within Eight (8) International Banking Hours release full payment to Lessor’s designated bank via Fed-Wire or according to the MT-103;
    9.

    Within Eight (8) International Banking Hours after receipt of clear funds, Lessor’s Bank will electronically deliver the Bank Guarantee and deliver hard copy Bank Guarantee Instruments within Seven (7) International banking days to the Lessee or his bank as specified in the funding instrument;
    10.

    Simultaneously the Lessee shall effect payment to all the intermediaries according to the Master Fee Protection Agreement without delay or holding. The Master Fee Protection Agreement with this Transaction code and date shall be made an integral part of this LOI/Contract as an attachment;
    11.

    The above procedures shall be repeated for subsequent tranches.

    BG FOR DISCOUNTING-

    1.

    The buyer submits this LOI with full banking co-ordinates, Corporate profile (CIS), a clear color copy of the Buyer signatory’s passport and a Proof of Fund for purchasing of the said Bank Guarantee;
    2.

    The Seller signs this LOI/Contract upon successful probe of Proof of Fund of Buyer party and provides Seller’s full banking coordinates and returns it to the Buyer. The LOI/Contract upon being signed and returned by the Seller to the Buyer shall then become a formal legally binding Contract between both parties;
    3.

    After signing and returning of this LOI/Contract, both parties shall lodge the LOI/Contract with their respective banks;
    4.

    Seller’s Bank will SWIFT the full text Pre-Advice of the Bank Instrument to Buyer’s bank. Upon Buyer’s Bank successful verification and authentication of the Pre-advice, Within three (3) working days, Buyer will instruct his funding bank to swift ICBPOs in the form of MT103-Field 23 for Seller’s Bank verification and authentication;
    5.

    Upon Seller’s Bank successful verification and authentication of the MT103/23, Seller’s Bank will swift a certified Corporate Invoice to Buyer’s Bank containing: CUSIP/Registration Numbers, Custodial Safekeeping Receipt Numbers, ISIN Numbers, term, text of instruments, denominations, name(s) of issuing bank(s), date of issue, date of maturity, access code and all pertinent data necessary for the Buyer’s Bank to authenticate and validate the data of the invoiced instrument via swift MT760;
    6.

    Upon the successful verification and authentication of the said Invoice, the Buyer’s Bank will release the fund to the Seller’s designated account within eight (8) banking hours;
    7.

    Upon Seller’s Bank receipt of the fund, Seller Bank will deliver the hard copy of BG to the buyer’s designated bank by bank courier within seven (7) banking days;
    8.

    Simultaneously, the BUYER shall effect payment to all the intermediaries according to the Master Fee Protection Agreement (MFPA) without delay or withholding. A MFPA with this Transaction Code and date shall be made an integral part of this LOI/Contract;
    9.

    The above procedures shall be repeated for subsequent tranches.


  3. Bank Guarantee is a security bond for a contract. If the contractor or a candidate renders financial losses to the principal/employer, the BG will be encashed by the principal/employer. Before entering the contract, the second party or the candidate has to approach a bank where he has financial dealings. The bank issues surety (BG) to refund the money in his account in case of default.


  4. TALK TO THE BANK,THEY CAN ALSO ISSUE AGAINST SOME COLLECTERAL SECURITY SUCH AS HOUSE,OR OTHER PROPERTY,BUT THEY WILL CHARGE SOME FEES FOR THIS PURPOSE.


  5. You can get BG by getting FD made of the same amount in your name or you had to mortgage some property.Best is to go for cash or FD then only the Gurantee charges would be one fourth.


  6. The foreign employer wants a bank guarantee from you because in the event of you not able to perform your part of the employment contract for one year, he can have recourse to the bank guarantee and claim the amout which you agree to pay as compensation.
    The bank guarantee for a period of one year stating the amount you had agreed to pay in the event you are unable to perform your employement contrat with him for a period of one year.
    You have to request your bank to issue the bank guarnatee in favour of your foreign employer.
    To issue the bank guarantee,your bank may ask you to deposit with it the amount of the guarantee plus charges for issuing the guarantee.


  7. A certain amount of money is deposited with the high Court in Mumbai by the defendent. The court has passed an interm order that respondent can take the amount by providing a bank guarantee from a nationalised bank while the case is in progress. What is the process to get this bank guarantee.





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