Letter Of guarantee: is a written promise by the bank to compensate (pay a certain sum of money) to the beneficiary (local or foreign) in the event that the obligator fails to honor his/her/its obligation according to terms and conditions of contract/agreement. The bank may extend a one time or renewable guarantee facility.
Types of Letter of Guarantee issued by the Bank are:
- Bid Bond Guarantee: issued by the Bank in favor of a designated beneficiary will oblige the Bank to pay a sum of money to the beneficiary when the bidder withdraws from the bid during the bid period or fails to accept the award when he becomes the winner.
- Advance payment Guarantee: The Bank may issue an advance payment guarantee in favor of a beneficiary who makes the advance undertaking to pay a sum of money to the beneficiary when the person who received the advance fails to honor the contract terms in their entirety or in part.
- Performance Bond Guarantee: At the request of a bid winner the Bank may issue performance bond guarantee in favor of a beneficiary undertaking to pay a sum of money to the beneficiary in case the bid winner fails to deliver the goods or to perform the services in accordance with the terms and conditions of the contract.
Please review our general check list when you want to apply for any type of loan.