BANK

GURANTEE AND
IT’S TYPES

Presented by : Nischal Bhattarai

 Goods

Person A Person B
DEFINITON
 A bank guarantee is an assurance to a beneficiary that the
bank will uphold a contract if the applicant and
counterparty to the contract are unable to do so.
Application for
Bank guarantee Notifies
The
beneficiary

Goods and services

 PARTIES OF A BANK GUARANTEE
Transaction of goods
service
Applicant Beneficiary

Application
Bank
For bank Bank Notify
Guarantee
Guarantee
Guarantee Beneficiary
claim
claim

FCY Guarantee

Local Bank Foreign Bank

Bank
Guarantee
claim
ADVANTAGES OF BANK GUARANTEE
 Encourages business activities
 Reduce or mitigate the risk

 Increase in confidence of performance

 Creditworthiness

 Due Dilligence / Assessment

DISADVANTAGES
 Lengthy Process
 Fees and charges

 Collateral Requirement
TYPES OF BANK GUARANTEE
 Bid bond Guarantee
 Performance Bond Guarantee

 Advance Payment Guarantee

 Deferred Payment Guarantee

 Counter Guarantee
THANK YOU