Bank guarantees

Bank Guarantees (BGs), are undertakings issued by banks on behalf of their customers to cover losses that may occur. The bank guarantee means that the lender will ensure that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it.

These include the following-:

  • Bid bond (tender) guarantee
  • Performance guarantee
  • Advance payment guarantee

Maximum term for a bank guarantee = one (1) year and shall be renewable at the bank’s discretion

  • Open-ended guarantees) shall be issued against 100% cash cover in the same currency, which shall be held by the bank till the beneficiary of the guarantee specifically releases the bank from its guarantee obligations.
  • Commission = 1.5% Quarterly
  • All guarantees shall have a fixed expiry date and a limited amount
  • The bank shall charge a guarantee commission periodically (quarterly, semi-annually, and annually on renewal) as approved