
Bank guarantee are irrevocable undertaking by the bank to irrevocably the guarantees person a specified sum amount upon person is on receipt of the first demand in writing accompany by a written statement stating that the guaranteed person is in breach of contract
Guarantees can be in the form of: Bid Guarantee, Advance payment Guarantee, Performance Guarantee
Features:
- Customer creditworthiness will be analyzed under the same criterion and consideration discussed under corporate overdraft, taking into consideration the nature of a particular guarantee
Benefits:
- It is economically cheaper compared to other facilities e.g. Bank Overdraft
- Enable the customer to engage in undertakings which requires such guarantees, hence make more business