Bank Guarantee

to pay him a certain sum on behalf of the bank¶s customer. .Meaning ‡ A guarantee given by a bank to a third person. on the customer failing to fulfil any contractual or legal obligations towards the third person.

Types of Bank Guarantee ‡ Financial Guarantee ‡ Performance Guarantee ‡ Deferred Payment Guarantee .

.Types of Bank Guarantee ‡ Financial Guarantee Issued by banks on behalf of the customer¶s requirements to deposit a cash security or earnest money. In case the contractor does not take up contract of awarded then the Government departments invoke the guarantee and collect the money from the banks. Mostly used on behalf of customers dealing with Government departments.

that the customer will perform the contract entered into by the customer as per the condition stipulated in the contract. . Failing will compensate the third party up to the amount specified in the guarantee.Types of Bank Guarantee ‡ Performance Guarantee Bank assures a third party. Specific date / time duration is also given.

when goods or machinery are purchased by a customer on long-term credit and the payment is to be made in installments. . in the event of default by the customer.Types of Bank Guarantee ‡ Deferred Payment Guarantee Under this type of guarantee. the banker guarantees payment of installments spread over a period of time. This type of guarantee is required. A differed payment guarantee constitutes an undertaking on the part of the bank to make payments of deferred installments to the seller on the due dates.

submitted as excise security to guarantee payment of one or more tax liabilities.Other types of guarantee ‡ Excise guarantee . . taxes or other payments to the Customs Office.ensures the payment or surrender of prizes in a lottery/promotion action/game organised by the principal. y Lottery guarantee . it may replace a cash deposit or surety. y Rent payment guarantee .secures the payment of customs duties. y Customs guarantee . it may replace a cash deposit or surety.secures a payment of rent.

‡ Efficiently collect your receivables with the use of the guarantee. . ‡ Quickly receive payment of the claimed amount regardless of the counterparty's financial situation. ‡ The Bank will take the counterparty risk from you. which is usually involved with court proceedings. also without delay. ‡ Limit the risk of counterparty's default against contractual terms and conditions.Benefits as a Beneficiary ‡ Increase security of trade transaction with your counterparty.

‡ we will agree with you the amount of the guarantee depending on the terms and conditions of your contract with the guarantee beneficiary. ‡ maintain financial liquidity. ‡ get professional assistance and advice from your Biznes Advisor when submitting documents and assessing the agreement. ‡ ensure further effective cooperation with your counterparty as you will not have to commit your own money to secure the transaction.Benefits as a Principal ‡ strengthen the credibility of your business as seen by the counterparty thanks to the renown of Bank Millennium SA as the guaranteeing bank. . which will underlie the guarantee and also when verifying any potential claims under the guarantee.

.Precautions to be take in Issuance of Bank Guarantee ‡ ‡ ‡ ‡ Amount Guaranteed Period of Guarantee Claim period in a guarantee Counter Guarantee and Other Security.

Precautions to be take in Payment under Bank Guarantee ‡ Proper Invocation of Guarantee ‡ No Injunction Prohibiting Payment .

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