Promise by an individual or organization to repay a loan in the event of default.

A Guarantee market is a centre where finance is provided against the guarantee of a reputed person in the financial circle. Guarantee is a contract to discharge the liability of a third party in case of his default. In case the borrower fails to repay the loan ,the liability falls on the shoulders of the guarantor. Hence the guarantor must be known both to the lender and borrower

. There are many types of guarantees. The common forms are: Performance guarantee Financial guarantee Financial guarantee: In India the market for financial guarantees is well organized. The fin guarantees in India relate to : 1)Deferred payments for imports and exports 2)Medium and long term loans raised abroad. 3)Loans advanced by banks and other financial institutions

These guarantee financial service is available to both individual and corporate customers.
These guarantees are provided by commercial banks, development banks , governments ,both central and states and specialized guarantee institutions like ECGC(Export Credit Guarantee Corporation) and DICGC(Deposit Insurance and Credit Guarantee Corporation).