Bank guarantees can be categorized into several types based on their roles in foundational contracts and the differing responsibilities assumed by the guarantor. The following are specific types of bank guarantees:
Loan Guarantee: This type of guarantee is issued by a bank at the request of the borrower, aiming to ensure that the borrower will repay the principal and interest of the loan according to the terms of the loan agreement.
Financing Lease Guarantee: This guarantee is requested by the lessee from the bank, ensuring that the lessee will make timely rental payments to the lessor as specified in the lease agreement.
Countertrade Guarantee: Under countertrade agreements, this guarantee is issued by the bank at the request of the party acquiring equipment or technology. It ensures that the acquiring party will use the products or funds obtained from selling the finished products to compensate for the costs of the imported equipment and technology, including interest, within a specified period.
Bid Guarantee: This is a guarantee issued by the bank at the request of the bidder, ensuring that the bidder will comply with their commitments during the bid's validity period. It guarantees that the bidder will not withdraw their bid, change their bid conditions, or modify the original bid price. Additionally, if the bid is successful, the bidder will sign a contract with the buyer within a specified timeframe.
Performance Guarantee: This guarantee is issued by the bank upon the request of the supplier or contractor to the buyer or owner, ensuring that contractual obligations will be fulfilled.
Advance Payment Guarantee: Also known as a repayment guarantee or deposit guarantee, this type is issued by the bank at the request of the supplier or contractor, guaranteeing that if the applicant fails to perform or does not utilize the advance payment according to the contract, the bank will refund the specified amount of the advance payment.
Payment Guarantee: This guarantee is issued by the bank at the request of the buyer or owner to ensure the payment of the loan or the progress payments for the contracted work to the seller or contractor.
