Bank guarantee - a document confirming the solvency of the company, for which the bank is ready to vouch and guarantees to fulfill monetary obligations under the contract in case of non-fulfillment of its conditions. Aiyl Bank OJSC provides a wide range of bank guarantees, taking into account their purpose, terms and other needs of customers.
A bank guarantee is an irrevocable obligation of the Bank to perform in cash in the event that a third party fails to fulfill its obligations secured by a bank guarantee.
Types of bank guarantees:
- payment guarantee - fulfills the obligation to pay for the goods or services provided on credit;
- Advance return guarantee – reimburses the amount of the transferred advance in case of non-delivery of the prepaid goods or services;
- tender (competitive) guarantee - prevents cases when the company that won the tender does not fulfill the order;
- contract performance guarantee - compensates for the cost of the "forfeit" for violation of the terms of the contract (in case of non-compliance with the parameters or prescribed characteristics of the goods, refusal of warranty service, etc.);
- counter-guarantees - the bank's obligation to another guarantor bank to financially secure the guarantee issued by it;
- customs guarantees - ensures the payment of customs duties and fees by importing enterprises.
- minimizing the risks of non-fulfillment or improper fulfillment of obligations under transactions;
- the ability to enter new markets with minimal risk and cost;
- low cost of the service compared to interest rates on commercial loans;
- the ability to work with advance payments without the risk of incurring losses in case of unfair execution of the contract;
- guaranteed fulfillment of obligations increases the likelihood of agreeing on more favorable price terms;
- the possibility of opening a credit line under bank guarantees upon the onset of payment terms without releasing working capital;
- the opportunity to participate in public tenders and purchases, where a guarantee is a mandatory requirement.
Benefits for the buyer/importer:
- the opportunity to participate in the supply of goods and the provision of services for state and municipal customers;
- the possibility of obtaining a trade credit;
- possibility to return the paid advance payment;
- the guarantee fee is usually lower than the interest on the loan.
Benefits for the seller/customer:
- high reliability;
- ensures the fulfillment of obligations under the contract;
- encourages the contractor to accurately and timely fulfill its obligations under the contract;
- helps the customer/seller assess the financial position of the contractor/buyer.
A bank guarantee is used to reduce the possible losses of the buyer or seller in the event that one of the parties fails to fulfill its obligations to deliver the goods and/or pay for them.