Bank Guarantee

Guarantee means 'a promise' usually in writing that some thing will be done.

Bank Guarantee: A Bank Guarantee is a written undertaking given by a Bank to perform the promise or discharge the liability of its customer in case of his default.



In other words, by issuing the guarantee, the Bank commits itself that, in case the Principal debtor signing the undertaking, fails to pay/perform the undertakings within the stipulated period and/or abstain from the proper and timely performance of his undertaking, for any cause or reason whatsoever, the Bank shall pay the amount stated in the Guarantee to the beneficiary, immediately on receiving the claim along with the Bank Guarantee from the beneficiary as per terms of the guarantee. 

Parties of Bank Guarantee:

i) Surety or Guarantor- The Bank, who gives the guarantee.
ii) Principal Debtor-The client, whose default the guarantee is given
iii) Beneficiary-To whom the Guarantee is given