Types of Bank Guarantee:
- Financial guarantee
- Performance guarantee.
Performance Guarantee is one by which:
- Due performance of a contract undertaken by a customer in favour of Govt. bodies and others for supply of materials, construction of building etc.
- Due performance of an equipment/project after completion for a specific period.
- BG issued in lieu of earnest money/security deposit specified to be deposited while contractors bid for a tender in favour of Government Departments and others.
- BG issued in favour of Customs Department in respect of payment of customs duty by the customer.
- Guarantees for obtaining advance payment
- Guarantees issued in favour of IATA/Airlines for providing air tickets to travel agents.
- Guarantees issued in favour of Electricity Boards and Power Utilities, Water Boards etc guaranteeing payment of electricity/water bills
- Guarantees issued for releasing retention money.
- Guarantees issued in favour of nominated Banks for selling gold to Jewelers on credit.
- Guarantees issued in favour of Customs/Excise/Sales Tax for deferring payment of duties.
- Guarantees/ Comfort letters issued in favour of lenders of buyer's credit/ suppliers credit.
- Guarantees issued in favour of Banks/ FIs guaranteeing repayment of loans.
- Guarantees issued to Stock Exchanges on behalf of stockbrokers for margin money.
- Guarantees issued under EPCG Scheme for customs duty exemptions.